Stocks Climbed for the Week, as Market Grinds Higher to 18-Month Highs

Published on Saturday, 13 March 2010 09:06 Written by TradersHuddle Staff

Weston, March 13^th (Tradershuddle.com) – Stocks posted another weekly gain, building in last week’s rally. Corporate deals and economic data, which pointed to a strengthening recovery, helped the market to keep grinding higher.

For the week, the Dow gained 0.55%, while the S&P 500 index jumped 0.99% and the NASDAQ rallied 1.78%.

At the start of the week, trading was tepid with most stocks climbing and the NASDAQ edging to an 18-month high. . Investors had eased concerns on Greece’s deficit crisis, and with American International Group (NYSE:AIG) announcing the sale of its foreign life insurance unit to MetLife (NYSE:MET) for around $15 billion in cash and stock.

The AIG sale helped reassured investors, as they see it as a good sign that the troubled insurer is able to raise capital by selling its assets to try to pay back the bailout funds to the U.S. government.

Telecom shares climbed 1.25% as a group posting the biggest advance among the 24 S&P 500 industry groups, as shares of Sprint Nextel (NYSE:S), the third wireless U.S. carrier, rallied 3.7% after the company said it expects revenue growth in the next several quarters. 

Health insurers and drug makers declined as President Obama criticized insurance providers for high premiums and denying coverage to the sick in a speech in Philadelphia. It was the first of several speeches the president will deliver to try to drum up support for health-care reform.

The Dollar gained versus the euro and the yen. The greenback was weaker earlier against the euro stoked by speculation that wealthier European nations will rescue Greece financially if needed, but euro gains faded during the trading session.

On Tuesday, the market opened on the weak side, and quickly moved to positive territory on speculation that the economy recovery is gathering strength. But gains fizzled at the end of the session, with the broad market index posting a slight gain and the tech heavy NASDAQ climbing to a fresh 18-month high.

Telecom again posted one of the biggest gains among the 24 S&P 500 industry groups. And Financials made a comeback, with Citigroup (NYSE:C) gaining more than 7% leading the pack, amid speculation that the government was planning to restrict short sales on the companies it's bailed out and currently owns stock in.

In overseas trading, European markets ended mixed and most Asian markets ended higher, with the exception of Japan's Nikkei, which finished lower.

The Dollar gained versus the euro and fell against the yen. Crude oil declined for the first time in three days as the greenback strengthened, reducing the appeal of commodities as an alternative investment. The contract for April delivery fell 38 cents to settle at $81.49 a barrel.

Treasury prices advanced on a record tying $40 billion 3-year note auction demand. The yield on the benchmark 10-year note stood at 3.70%.

Mid week, stocks gained for a second day led by a rally in financial shares. Citigroup (NYSE:C) surged another 3.66%, and Bank of America (NYSE:BAC) gained 1.85% and posted the second biggest gain in the Dow Jones Industrial Average, after bullish comments for the sector from a well known sector analyst. Economic data added to the optimism that the economic recovery is gathering strength and that companies earnings potential should improve.

In economic news, wholesales inventories unexpectedly fell 0.2 percent in January as sales rose to their highest level since October 2008; economists had expected to see a 0.2-percent increase in inventories.

Earlier, a report showed mortgage applications rose last week, even as mortgage rates rose.

Crude oil rose to an eight-week high and gasoline surged after a government report showed that U.S. fuel supplies declined as demand climbed and refineries idled units. The contract for April delivery climbed $0.60 to $82.09 a barrel.

Treasury prices fell, led by shorter-maturity debt, as gains in global stocks lessened the appeal of U.S. government debt. The benchmark 10-year notes pared losses after the bid-to-cover ratio was the highest on record on the Treasury’s sale of $21 billion of the debt. The yield on the 10-year note increased to 3.72%.

On Thursday, stocks opened lower, as the weekly jobless claims report disappointed investors. Claims fell to 462,000, shy of expectations and continuing claims rose more than expected. Also pressuring the market before the open was a report out of China, which showed inflation rose to a six-month high, escalating fears that the economy is overheating and demand for commodities and other goods may start to slow.

The market struggled for most of the trading session, failing to hold any gains, until the final hour of trading, as banks rallied on signs that the financial reform may continue to see obstacles and actually get stuck in Capitol Hill’s gridlock. Healthcare also pushed higher as investors speculated that reform will be harder to pass.

On economic news, a report from the Commerce Department showed that the U.S. trade deficit shrank 6.6%, as oil imports fell to their lowest level since 1999.

The Dollar fell versus the euro and gained against the yen. The euro appreciated on speculation Greece’s deficit crisis has been contained.

Treasury 30-year bonds gained on record bolstered demand at today’s auction of $13 billion in bonds. The yield on the benchmark 10-year note climbed to 3.74%

At the end of the week, the market moved higher after the Commerce Department reported that February retail sales unexpectedly rose 0.3%. Sales excluding autos rose 0.8% in February after rising 0.5% in January. Economists thought sales would rise 0.1%. Stocks lost momentum and fluctuated for much of the trading session after the University of Michigan consumer sentiment index fell to 72.5 in early March, disappointing investors. At the end of the trading session the Dow was able to post a small gain, with the S&P 500 holding the 1,050 level.

On other economic news business inventories were unchanged in February, after falling 0.2% in the previous month. Economists thought inventories would rise 0.1%.

The Dollar fell versus the euro and the yen after the increase in U.S. retail sales boosted investors’ demand for riskier assets that benefit from global growth.

Crude oil fell for the first time in three days after a decline in consumers’ confidence. The contract for April delivery fell 87 cents to $81.24 a barrel.

Treasury prices rose, lowering the yield on the 10-year note to 3.71% from 3.72% late Thursday.

The mixed finish and S&P/Dow doji imply some loss of momentum. However, there still no indications of developing short term pressure. A failure to reclaim the highs (1153 S&P 500) and a breach/close under the low (1146) would be an initial weakening sign.

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