The Markets
The S&P 500 came tantalizingly close to its all-time high but couldn't quite manage to top it. Meanwhile, the Dow's 10-day winning streak finally came to an end on Friday. Nevertheless, all four domestic indices pulled off a positive week, with the small caps of the Russell 2000 in the lead once again.
Last Week's Headlines
- A 9% spike in gas prices was largely responsible for pushing consumer inflation up by 0.7% in February; that's the biggest monthly increase since June 2009. The Commerce Department said consumer inflation has increased prices overall by 2% since February 2012. Not including food (up 0.1% because of higher produce costs) and energy, prices rose 0.2% during the month. Meanwhile, wholesale prices also were up 0.7%, for a 1.7% annual inflation rate.
- U.S. industrial production rose 0.7% in February as utility output returned to normal seasonal levels. The Federal Reserve said utilization of the nation's manufacturing capacity rose to almost 80%, only slightly below its long-term average.
- Consumer spending rose 1.1% in February--the biggest increase since September, according to the Commerce Department. Though increased spending at gas stations accounted for part of the increased spending, retail sales other than gas also were up 0.6%, according to the Commerce Department. Total spending was 4.6% higher than last February.
- Testimony at a U.S. Senate hearing showed that J.P. Morgan Chase failed to give regulators timely information about the scope of its 2012 losses on its "London Whale" trades in credit default swaps, which cost the bank billions. The hearings have fueled renewed discussion of the so-called Volcker rule, which would restrict banks' ability to make certain speculative investments.
- The International Monetary Fund said that though banks in the European Union have made progress in stabilizing themselves, they still face substantial risk from lending losses resulting from continued weakness in the EU economy. Meanwhile, the Federal Reserve agreed to allow 14 U.S. banks to increase dividends or repurchase shares, but expressed concerns about the plans of 4 others.
- The tiny island nation of Cyprus may be required to tax bank depositors in order to qualify for a €10 billion bailout of the country's banks by the European Union and the International Monetary Fund. The Cypriot parliament is scheduled to vote on the bailout package Tuesday when banks reopen after a three-day holiday.
Eye on the Week Ahead
Investors will be watching Tuesday's vote in Cyprus because of its potential for a ripple effect in global markets if a rejection of the bailout package destabilized the country's financial system. Wednesday's Federal Open Market Committee announcement is unlikely to call a halt to quantitative easing, but could review some of the options for doing so at some point.
Key dates and data releases: housing starts (3/19); FOMC meeting (3/20); home resales (3/21).
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.
