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Proprietary Trading Weekly Market Recap For Friday, Apr. 18, 2014

Stocks Rebound on Strong Data

Investors faced slew of economic data and earnings during the course of the week which led to a technical bound that catapulted stocks higher. After testing key support near the 200-day moving average, the Nasdaq shot higher and led the equity rebound. While General Electric and Yahoo beat earnings estimates, Google and IBM disappointed. For the week the S&P 500 index closed higher by 2.71%.

Early in the week traders learned that military forces sympathetic to Russia, have taken over a couple of cities in the eastern part of Ukraine and have incited more unrest. The position and weapons of those forces is leading NATO to conclude that Putin is seeking the full occupation of Ukraine, regardless of his real interest.

Later in the week, traders listened as Yellen was very clear. She stated that there remains a large gap between the Fed's objectives and the economic performance, especially the labor market conditions. She suggested that it may take until the end of 2016 to reach the Fed's inflation and employment targets. She also continued to warn that inflation risks were still to the downside.

Economic News

U.S. retail sales recorded their largest gain in 1.5 years in March in a decisive sign the economy is bouncing back from its weather-induced slumber. The Commerce Department said retail sales increased 1.1 % last month, the biggest gain since September 2012.

On the inflation front, the headline consumer price index and the core CPI advanced 0.2% in March from the previous month, ahead of consensus estimates for a 0.1% rise in both series, matching February's pace. The year-over-year change in the core index rose to 1.7% from 1.6%, while the year-over-year change in the headline index was boosted to 1.5% from 1.1%. Economists expected the former to hold steady at 1.6% and the latter to rise to 1.4%, because of a drop in energy prices in March 2013.

Factory production increased 0.5% in March, according to data from the Federal Reserve on Wednesday. Overall industrial production was up 0.7%, beating analysts' expectations. February's industrial production was revised up to a gain of 1.2% from a previously reported 0.6% rise, due to stronger gains for durable goods manufacturing and for mining. Analysts had expected a 0.5% jump in manufacturing output and a 0.5% rise in overall industrial output in March.

Housing starts increased at an annual rate of 946,000 last month. That was 2.8% more than February's 920,000 rate, which was revised up from the earlier estimate of 907,000. Economists had been looking for a March rate of 970,000. Single-family home starts last month grew 6% from February. Building permits, a barometer of future activity, fell 2.4% overall.


Google delivered quarterly earnings and revenue that fell short of analysts' expectations. The company posted first-quarter earnings excluding items of $6.27 per share, up from $6 a share in the year-earlier period. Revenue increased by 19% to $15.42 billion from $12.95 billion a year ago. Analysts had expected the company to report earnings excluding items of $6.40 a share on $15.52 billion in revenue. Next week the earnings parade will continue with the bulk of the S&P 500 index reporting results.