US stocks ended with strong gains for the week that ended on 12 July 2013. Earning reports kicked in during the week. Stocks rose as market participants awaited the Minutes from the June 18/19 meeting of the Federal Open Market Committee. Following the comments from Chairman Bernanke, the major averages saw strong gains during the week. Stocks registered third straight weekly gains.
For the week, the Dow ended higher by 328.46 points (2.2%) at 15,464.3. Nasdaq ended higher by 120.7 points (3.5%) at 3,600.08. S&P 500 ended higher by 48.3 points (3%) at 1,680.2.
On Monday, the S&P 500 settled higher by 0.5% as eight of ten sectors ended in the green. The upbeat open was aided by a strong showing in Europe where major averages overlooked disappointing German industrial production data (-1.0% actual, -0.5% expected) and rallied on indications the next tranche of Greek aid will be approved by Eurozone officials.
Tuesday's session saw the S&P settle higher by 0.7%. Growth-oriented groups paced the advance even after the International Monetary Fund cut its 2013 global growth outlook to 3.1% from 3.3%. The materials sector gained 1.6% as steelmakers and gold miners outperformed. Dow component Alcoa shed 0.1% after its slim earnings beat was overshadowed by a 1.9% year-over-year decline in revenue. In addition, the aluminum producer reaffirmed its global aluminum demand growth forecast at 7.0%.
On Wednesday, the major averages ended in mixed fashion. The Dow shed 0.1%, Nasdaq added 0.5%, and the S&P 500 ended flat. Equities held their levels into the afternoon as market participants awaited the Minutes from the June 18/19 meeting of the Federal Open Market Committee. Most notably, the Minutes indicated several members judged a reduction in asset purchases would be warranted 'soon.' However, the Minutes were overshadowed by Ben Bernanke's speech after the close, which contributed to a sharp rally on Thursday.
Following the comments from Chairman Bernanke, the major averages saw gains between 1.1% and 1.6% with the Dow Jones and S&P 500 closing at fresh record highs. Equities registered the bulk of their advance at the open after remarks from the Fed Chairman created some push back against the idea the Fed may begin slowing the pace of its asset purchases at the September meeting. Mr. Bernanke commented on the economic landscape by saying the current employment level is overstating the health of the job market and that rates may be kept low even after the previously mentioned unemployment threshold of 6.5% is reached.
U.S. stocks on Friday, 12 July 2013 recorded a third week of gains, with the Dow industrials and the S&P 500 tallying record closes following upbeat earnings from two major banks. The Dow Jones Industrial Average climbed 3.38 points to 15,464.30. The S&P 500 added 5.17 points, or 0.3%, to 1,680.19, with financials pacing its gains. The Nasdaq Composite gained 21.78 points, or 0.6%, to 3,600.08.
Quarterly earnings were in focus this morning after JPMorgan Chase and Wells Fargo announced their results. Both banks reported bottom-line beats on in-line revenues. However, JPMorgan Chase saw a 7.0% quarter-over-quarter decrease in mortgage originations while Wells Fargo reported a 2.7% increase. The results provided support for other bank shares and the financial sector settled atop the sector leader board.
On the downside, the industrial sector was pressured by the underperformance of two large components. United Parcel Service fell 5.8% after issuing cautious second quarter and full year earnings guidance due to a slowing US industrial economy. In addition, Dow component Boeing tumbled on heavy volume after a fire took place aboard a 787 Dreamliner at London's Heathrow Airport.
Friday's economic data revealed the largest increase in producer prices since September 2012 due to an unexpected jump in energy prices. June PPI rose 0.8%, up from a 0.5% gain in May, and well above the consensus expectation of a 0.3% rise. The energy index rose 2.9% in June after increasing 1.3% May. That is the biggest monthly increase since February. The pickup in energy costs was due to a 7.2% increase in gasoline prices.
Excluding food and energy, core prices remain on a weak trend. Prices increased 0.2% in June after increasing 0.1% in both April and May. The consensus expected these prices to increase 0.1%.
Prices also briefly turned a bit higher Friday following an unexpected decline in consumer sentiment. The preliminary July reading of the University of Michigan and Thomson Reuters consumer-sentiment index reportedly declined to 83.9 from a final June reading of 84.1. Market expected the reading to be unchanged. While employment levels have generally strengthened over the past few weeks, recent volatility in the stock market coupled with increases in oil and gasoline prices likely reduced overall sentiment levels.
The Current Conditions Index rose to 99.7 in July from 93.8 in June. That is the highest level since July 2007. Meanwhile, consumers became more concerned about the future. The Expectations Index fell to 73.8 in July from 77.8 in June.
Advancers just outpaced decliners on the New York Stock Exchange, where 681 million shares traded. Composite volume approached 3.1 billion.
Gold futures finished with a modest loss on Friday, 12 July 2013 at Comex to break a four session string of gains, but the metal still scored its best weekly percentage gain in nearly two years. Gold for August delivery shed $2.30, or 0.2%, to settle at $1,277.60 an ounce on the Comex division of the New York Mercantile Exchange. For the week, prices were 5.4% higher. On Friday, September silver gave up 16 cents, or 0.8%, to end at $19.79 an ounce. The contract saw a gain of 5.6% for the week.
Crude Oil futures settled higher on Friday, 12 July 2013 to score a third-consecutive weekly increase, with the market encouraged by Federal Reserve Chairman Ben Bernanke's recent assurance that the central bank was in no hurry to raise interest rates. Crude for August delivery tacked on $1.04, or 1%, to settle at $105.95 a barrel on the New York Mercantile Exchange. For the week, prices were up around 2.6%.
For the year, the Dow, Nasdaq and S&P 500 are trading higher by 18%, 19.2% and 17.8% respectively.
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