Stocks ended the week up despite sluggish economic news in the U.S. There was a notable amount of daily volatility related to European sovereign debt. Traders are counting on central banks to "come to the rescue." Stocks dipped Monday on disappointment on a bailout package for Spanish banks. Stocks gained Tuesday despite a jump in Spanish bond yields after Chicago Fed President Charles Evans took the position for further ease if needed in a speech.
But equities headed down at mid-week on worries about Greek elections-whether pro-euro candidates or not will win in parliament. Also, retail sales in the U.S. were somewhat disappointing. Lower oil prices pulled down the energy sector.
Thursday, a favorable report on consumer prices (headline CPI down notably) led traders to believe that the Fed and other central banks are in position to ease further-especially if needed after the Greek elections. Equities gained Friday on expectations that central banks will flood markets with liquidity if needed. There was little to support such expectations but this belief lifted equities. Stocks were up moderately for the week, largely on hopes of central bank actions which may or may not take place.
Equities were up this past week. The Dow was up 1.7 percent; the S&P 500, up 1.3 percent; the Nasdaq, up 0.5 percent; the Russell 2000, up 0.3 percent; and the Wilshire 5000, up 1.0 percent.
For the year-to-date, major indexes are up as follows: the Dow, up 4.5 percent; the S&P 500, up 6.8 percent; the Nasdaq, up 10.3 percent; the Russell 2000, up 4.1 percent; and the Wilshire 5000, up 6.2 percent.
Treasury yields moved only moderately daily this past week, net down for the week. Rates dipped Monday as traders moved to Treasuries on contagion concerns about Spanish banks. Tuesday, rates rose on expectations of further ease by the Fed after comments by Chicago Fed President Charles Evans endorsing further loosening. Yes, rates rose on belief of further ease in monetary policy.
Rates softened Wednesday on disappointing retail sales but nudged up Thursday on speculation of further monetary ease by central banks. But at week's close, many traders decided to play it safe and park money in Treasuries ahead of Greek elections and yields dipped moderately.
For this past week Treasury rates were mostly down as follows: 3-month T-bill, up 1 basis point; the 2-year note, unchanged; the 5-year note, down 4 basis points; the 7-year note, down 5 basis points; the 10-year note, down 6 basis points; and the 30-year bond, down 6 basis points.
It was a quiet week for oil prices. Daily moves were marginal. After quiet Monday and Tuesday, the spot price of West Texas Intermediate fell a "whopping" 70 cents for the day on soft retail sales. Crude "jumped" a little over a dollar a barrel on Thursday on belief that the Federal Reserve will ease monetary policy to boost growth.
Net for the week, the spot price for West Texas Intermediate rose 77 cents per barrel to settle at $84.03.