Market Week: February 19, 2013

The Markets

Equities markets generally spent a second week digesting January's strong gains. The Dow continued to flirt with the 14,000 mark, while neither the small-cap Russell 2000 nor the S&P 500 have had a negative week so far this year.

Last Week's Headlines

• U.S. retail sales bumped up 0.1% in January, according to the Commerce Department. Excluding autos, which slipped 0.1%, the monthly increase was 0.2%, with nonstore retailers and general merchandise stores performing the best. The increase put overall retail sales, which are not adjusted for price changes, 4.4% ahead of last January.
• Optimism about the European Union's economy got a reality check when the region's statistics agency reported that the eurozone's GDP fell by 0.6% in the final quarter of 2012 and was 0.9% lower than a year earlier. For all of 2012, the eurozone's economy shrank 0.5%.
• U.S. industrial production was down slightly in January; the Federal Reserve said a 3.9% decline in auto manufacturing contributed to the 0.1% drop. However, industrial production was still 2.1% ahead of a year earlier, though it's still only at 98.6% of its 2007 average.
• The Group of Seven industrialized nations issued a joint statement saying that members' monetary policies should not devalue currencies simply to bolster an individual country's economy by encouraging exports. European leaders have expressed concern about a rising euro, and Japan recently increased bond-buying efforts that resemble the U.S. Federal Reserve's and that have reduced the yen's value.
• American Airlines and United agreed to merge, forming the largest airline in the world, and Berkshire Hathaway (in conjunction with a private equity firm) announced plans to acquire H.J. Heinz.

Eye on the Week Ahead

In a holiday-shortened week, minutes of the Federal Open Market Committee's most recent meeting could shed light on members' thinking about winding down the Fed's bond-buying activity. Housing and inflation data also are on tap.
Key dates and data releases: wholesale inflation, housing starts, FOMC minutes (2/20); consumer inflation, home resales (2/21).

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Data sources: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.