Stocks resumed their winning ways last week, easily erasing the previous week’s losses, with both NASDAQ and the S&P 500 ending at all-time highs.
NASDAQ had the best week, rising 3.3% to close at 5092. On Thursday the index finally topped the record it reached before the tech stock bubble burst back in March 2000, then set another new record on Friday. The S&P ended at 2118 after rising 1.8% for the week, while the Dow added 1.4%. Tech stocks were the best performing sector in the S&P 500 last week, climbing 4.1%. The sector got a big boost on Friday from positive earnings reports from Microsoft, which jumped more than 10%, Amazon (+14%) and Google (+3%). Telecoms and consumer discretionary stocks both rose more than 3%.
Despite media reports that euro-area finance ministers had “hurled abuse” at Greece’s finance minister, the tense talks between the country and its creditors appeared to be nearing a positive conclusion – at least as far as the financial markets are concerned – enabling European stocks to rebound following the previous week’s big losses. The Stoxx Europe 600 gained 1.2%, recouping a little more than half of the prior week’s loss, while Germany’s DAX index rose 1% after losing 5.5% the prior week. As the pressure on Greece increased, the Athens Stock Exchange general index rebounded 4.4% after climbing 3.4% on Friday. Yields on 10-year German bunds ended the week at 0.16%, double where they were the week before. The talks between Greece and its creditors were reaching a critical juncture, with euro-area finance ministers saying they would not grant Athens any partial aid payments in exchange for a weaker program of economic reforms. “Time is running out,” European Central Bank President Mario Draghi said, “and speed is of the essence.”
The Shanghai composite index rose for the seventh straight week, climbing 2.5% despite Friday’s 0.5% decline. Chinese markets appeared headed for a fall last Monday after the government announced several actions to curtail margin trading and make it easier to short stocks. But before trading opened on April 20 the People’s Bank of China announced it would cut banks’ reserve requirements by one percentage point, its second reduction in less than a quarter and the biggest since December 2008. The stimulus measure sent stocks back up again. The Shanghai index is now up 36% so far this year and 123% over the past year. Other major Asian indexes were also higher for the week. Japan’s Nikkei 225 gained 1.9% despite a 0.8% loss on Friday, while Hong Kong stocks rose 1.5%. But Indian stocks failed once again to participate in the rally, falling 3.5% for the week after losing 1.5% the prior week. The Sensex is essentially flat so far this year.
U.S. economic reports released last week continued to disappoint. Durable goods orders for March, released on Friday, rebounded 4.0% in March from February’s 1.4% drop. But the figure was skewed upward by a 13.5% jump in the always volatile transportation category. Outside that sector, however, new orders fell an unexpected 0.2% while February’s core figure was revised sharply downward to a 1.3% decline. Orders were down in most categories. The Chicago Fed’s national activity index fell to minus 0.42 for March, remaining in negative territory for the entire first quarter. February’s reading was revised downward to negative 0.18 from minus 0.11. Housing numbers were mixed. Sales of existing homes jumped 6.1% in March to a better than expected annual rate of 5.2 million, the biggest monthly gain in a year and a half. But purchases of newly-built homes dropped more than 11% to an annual pace of 481,000 units, a four-month low and well-below the Street forecast of 518,000. However, February was revised upward to 543,000, which was the highest total in seven years. Unemployment claims were largely unchanged at 295,000 for the week but higher than expected.
Reports/dates/facts/links worth paying attention to over the next week:
- April 27: Dallas Fed manufacturing survey for April.
- April 28: Federal Open Market Committee meeting begins in Washington; Conference Board consumer confidence index for April; S&P/Case-Shiller home price indexes for February.
- April 29: FOMC meeting ends, followed by announcement; first quarter GDP; pending home sales for March.
- April 30: Weekly unemployment claims; personal income and outlays for March; Chicago PMI for April.
- May 1: ISM manufacturing composite index for April; University of Michigan consumer sentiment index for April (final reading); construction spending for March.
Copyright © 2015 by Wright Investors’ Service, Inc. The views expressed in this blog reflect those of Wright Investors’ Service, Inc. and are subject to change. Statements and opinions therein are based on sources of information believed to be accurate and reliable, but Wright Investors’ Service, Inc. makes no representations or guarantees as to the accuracy or completeness thereof. These views should not be relied upon as investment advice.