Stocks finished higher for a fourth straight day on Friday and enjoyed their best weekly performance since November.
Moreover, the market's positive finish came courtesy of some buying at the end of the day, a signal that stocks could move higher next week.
The Dow Jones industrials finished up 54 points to 7,224. The Standard & Poor's 500 Index was up 6 points to 757, and the Nasdaq Composite Index added 5 points to 1,432.
One reason for the optimism: speculation that health insurer Humana (HUM, news, msgs) may be a takeover candidate. The stock was up 7.7% Friday to $24.83 and more than 27% on the week. Trading in options has also been heavy. The likely merger partner appears to be Aetna (AET, news, msgs). Aetna rose 3.8% to $24.31.
The four-day winning streak was the longest for the Dow and S&P 500 since a 5-day streak between Nov. 21 and Nov. 28 and a five-day streak for the Nasdaq between Oct. 28 and Nov. 3.
This week's streak helped the Dow finish up 9% for the week, its best weekly performance since the week of Nov. 24, when it rose 9.7%. The S&P 500 and Nasdaq also had their best weekly performances since the week of Nov. 24, with the S&P 500 up 10.7% and the Nasdaq gaining 10.6%.
The gains come after big losses so far this year. The Dow is off 17.7%, with the S&P 500 down 16.2% and the Nasdaq off 9.2%.
The big question at the end of the week was whether the surge was just a bear market rally. The overwhelming consensus on Wall Street on Friday was bear market rally.
- Top Stocks blog: Where do markets go from here?
The U.S. market has dropped around 50% from its highs in October 2007 and may not finish until the Dow drops to, say, 6,000 or lower. Short, intense rallies often incur these big downturns.
The talk on Friday was that the S&P 500 could rise to 800 or 850, according to Bloomberg News before a pullback hits.
Next week features a two-day meeting of the Federal Open Market Committee, the Federal Reserve's rate-making body. The committee will probably leave the Fed's key federal funds rate alone (at 0% to 0.25%), but its statement, due Wednesday afternoon, will discuss any moves the Fed may make to try to keep the credit markets alive.
Other economic reports include industrial production on Monday, housing starts and building permits and the Producer Price Index on Tuesday and the Consumer Price Index report on Thursday.
Earnings reports are fairly light, but reports of interest will come from General Mills (GIS, news, msgs), office furniture maker Herman Miller (MLHR, news, msgs), 3Com (COMS, news, msgs) and Palm (PALM, news, msgs).
Health care leads the market
Partly because of the speculation surrounding Humana, health care stocks led the market. Merck (MRK, news, msgs) and Pfizer (PFE, news, msgs), which have been strong all week, were the second-best and fourth-best stocks among the 30 Dow stocks. Merck rose 12.7% to $27.07; Pfizer was up 3.7% to $14.54.Financial stocks were higher as a great week came to an end. The Select Sector SPDR-Financial (XLF, news, msgs) exchange-traded fund jumped 35% on the week. (Conversely, the UltraShort Financials ProShares (SKF, news, msgs) exchange-traded fund, which bets against financial stocks, fell 44.4% for the week.)
There was weakness in credit card companies. American Express (AXP, news, msgs) was down 0.5% to $13.09. Capital One (COF, news, msgs) was down 5.6% to $12.56, and Discover Financial Services (DFS, news, msgs) was off 5.9% to $6.23.
The stocks were squeezed by concerns about higher credit losses after a week of strong gains. "We haven't seen yet the worst in the deterioration of the credit portfolios," Keith Wirtz, president and chief investment officer of Fifth Third Asset Management, told The Associated Press.
At the same time, technology and energy shares were pressured for much of the day. Techs were held in check by weakness in Microsoft (MSFT, news, msgs), down 2.1% to $16.65; Research In Motion (RIMM, news, msgs), down 3.1% to $40.18; Apple (AAPL, news, msgs), 0.4% to $95.53; and Adobe Systems (ADBE, news, msgs), down 3.9% to $18.68. (Microsoft is publisher of MSN Money.)
Energy shares dropped as crude oil fell ahead of the weekend's meeting of the Organization of Petroleum Exporting Countries in Vienna. Crude oil closed down 78 cents to $46.25 a barrel after surging 11% on Thursday. ConocoPhillips (COP, news, msgs) was down 2.6% to $36.41.
| Close for week | Wk. ago close | % chg. | 2009 YTD chg. | |
|---|---|---|---|---|
| Dow Jones Industrial Avg. | 7,223.98 | 6,626.94 | 9.01% | -17.69% |
| S&P 500 Index | 756.55 | 683.38 | 10.71% | -16.24% |
| Nasdaq Composite Index | 1,431.50 | 1,293.85 | 10.64% | -9.23% |
| Russell 2000 Index | 393.09 | 351.05 | 11.98% | -21.30% |
| Crude oil per barrel | $46.25 | $45.52 | 1.60% | 3.70% |
| 10-yr. Treasury yield | 2.89% | 2.83% | 0.06% | 28.57% |
| Gold per troy ounce | $930.10 | $942.70 | -1.34% | 5.18% |
China worries about safety of Treasury securities
Yields on U.S.Treasurys moved higher early Friday after China's Premier Wen Jiabao said he was "worried" about the safety of the U.S. Treasury market.
"We have lent a huge amount of money to the United States," Wen said at a press briefing in Beijing Friday. "I request the U.S. to maintain its good credit, to honor its promises and to guarantee the safety of China's assets."
China holds the world's largest foreign-exchange reserves, reported at $1.9 trillion at the end of 2008, according to The Wall Street Journal. Approximately two-thirds of that sum is believed to be held in U.S. dollar assets, primarily Treasury bonds.
Wen’s words contributed to a decline in Treasuries, before the losses were recouped. Yields on benchmark 10-year notes rose as high as 2.96%, from 2.85% late Thursday, but fell back to 2.89% at the end of Friday's New York trading.
Wen's public airing of his concerns reflect how the relationship between China and the U.S. has changed under the pressure of the financial crisis. For years, the U.S. has pressed China to change how it runs its economy, including opening up its financial system, The Wall Street Journal noted.
But in the last year China's government has been increasingly vocal about what it sees as U.S. economic mismanagement. And as the U.S. government's largest creditor, it has become more assertive in trying to ensure its interests receive a hearing.
Lawrence Summers, director of the President Obama's National Economic Council, said the administration was determined to promote a vigorous stimulus package. "You have to be prepared to prime the pump," he said at the Brookings Institution in Washington. "If you allow the process of decay to continue to occur, it’s going to be more costly."
But he said the administration was also prepared to reduce deficit spending to avoid a new round of economic problems, once the economy began to recover.
Asian and European markets move higher
Markets rose sharply in Asia Friday as the Chinese government said it would support economic recovery with stimulus investment.Elsewhere in Asia, the Nikkei 225 Index ($JP:N225) jumped 5.2% to 7,569. The Hang Seng Index ($HSIX) climbed 4.4% to 12,526.
European stocks performed well in the wake of Thursday's rally in the U.S.
The Dow Jones Stoxx 600 Index ($DE:SXXP) rose 0.7% to 169, and London's FTSE 100 Index ($GB:UKX) was up 1.1% to 3,754.
While stocks have been rallying for the past few sessions, Goldman Sachs economists remained cautious about economic growth in 2009.
"Following the reduction of our Euroland growth forecast to minus 3.6% in 2009, the world economy is now likely to contract by 1% this year," Goldman economist Binit Patel said in a note to clients. Goldman earlier this month lowered its 2009 outlook for global GDP to minus 0.6% from a 0.2% decline.
| Fri. | Thur. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $46.25 | $47.03 | -$0.78 | 3.33% | 3.70% |
| Heating oil (per gallon) | $1.1972 | $1.2264 | -$0.0292 | -5.43% | -14.83% |
| Natural gas (per million BTU) | $3.9320 | $3.9950 | -$0.0630 | -6.34% | -30.06% |
| Unleaded gasoline (per gallon) | $1.3529 | $1.3457 | $0.0072 | 5.64% | 34.19% |
Consumer confidence improves -- slightly
The University of Michigan report on consumer sentiment, which is based on surveys of households, rose in March, indicating some stability among consumers.The index rose to a reading of 56.6 in March from 56.3 in February. Economists had been expecting a reading of 55.
"Historically, readings at this level suggest a great deal of distress," Christopher Low, chief economist at FTN Financial, told Bloomberg Television. "Things are very, very fragile, especially for consumers. Now we sit back and wait for the stimulus to kick in."
More from MSN Money
Trade gap shrinks
The U.S. trade deficit narrowed by 9.7% in January to $36 billion, the Commerce Department reported Friday.It was the lowest monthly gap since October 2002 and below Wall Street's expectations of a $38 billion deficit.
The petroleum deficit shrank to $14.7 billion in January, the lowest since September 2004. The nation's trade deficit with China widened to $20.5 billion from $20.3 billion in the same month a year ago.
Financial companies in focus
Financials got a lift Thursday after Bank of America (BAC, news, msgs) Chief Executive Officer Ken Lewis said the bank won't need more federal aid after the government finishes running its financial "stress test" on the company. Lewis also said Bank of America has been profitable so far this year and he expects the company to continue making money this year.Lewis's comments could spark some relief in the financials, Matt Buckland, dealer at CMC Markets, told MarketWatch.com.
- Top Stocks blog: Jim Cramer plays pussycat on 'The Daily Show'
"Upbeat comments from the CEO of Bank of America may well offer further support to beleaguered financials as we approach the weekend break, and although there's nothing of note on the domestic economic calendar, pointers such as Euro-zone retail sales and the Michigan confidence numbers both have the potential to provide momentum on a wider basis," Buckland said.
- Top Stocks blog: Is there a Jim Cramer pile-on?
Shares of Bank of America fell 1.5% to $5.76 but were up 45.8% this week alone.
Strength in the financials is crucial to the market's recovery, another expert said.
"The market will never get its footing until the financials make a low and hold it," Mike Stanfield, CEO of VSR Financial Services, told CNNMoney.com. "The market can't be healthy without a healthy financial system."
Geithner still solo at Treasury
A second person has withdrawn from consideration to be deputy Treasury secretary, according to published reports.H. Rodgin Cohen, chairman of the law firm Sullivan & Cromwell, took himself out of the running as he was going through the last stages of the Obama administration's vetting process, reports said. Cohen follows Annette Nazareth, who last week pulled herself out of consideration for the second-in-command post at the Treasury Department.
Secretary Tim Geithner currently has no Senate-confirmed senior aides in his department.
Google exec to head AOL
Time Warner's (TWX, news, msgs) AOL has a new chief executive officer, and he's coming from rival Google (GOOG, news, msgs).Tim Armstrong will succeed Randy Falco, who took over the helm in late 2006.
Armstrong had been president of Google's Americas operations, and was responsible for the Internet search giant's advertising sales business in North America and Latin America.
Andrew Rosenbaum contributed to this report.
| Fri. | Thur. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 0.190% | 0.200% | -0.010 | -24.00% | 65.22% |
| 5-year Treasury note yield | 1.872% | 1.913% | -0.041 | -7.33% | 20.70% |
| 10-year Treasury note yield | 2.885% | 2.892% | -0.007 | -5.13% | 28.57% |
| 30-year Treasury bond yield | 3.672% | 3.635% | 0.037 | -1.34% | 36.45% |
| Currencies | |||||
| U.S. Dollar Index | 87.935 | 88.165 | -0.230 | -0.24% | 7.04% |
| British pound in dollars | $1.3986 | $1.3945 | 0.0041 | -2.35% | -5.08% |
| Dollar in British pounds | £0.7150 | £0.7171 | -0.0021 | 2.41% | 5.35% |
| Euro in dollars | $1.2912 | $1.2922 | -0.0010 | 1.82% | -7.84% |
| Dollar in euros | € 0.7745 | € 0.7739 | 0.0006 | -1.79% | 8.50% |
| Dollar in yen | 97.94 | 97.49 | 0.45 | 0.34% | 8.04% |
| Canadian dollar in U.S. dollars | $0.786 | $0.783 | $0.0035 | 0.11% | -3.85% |
| U.S. dollar in Canadian dollars | $1.273 | $1.277 | -$0.0048 | -0.11% | 4.01% |
| Commodities | |||||
| Gold | $930.10 | $924.00 | $6.10 | -1.32% | 5.18% |
| Copper | $1.6645 | $1.6245 | $0.04 | 8.19% | 18.05% |
| Silver | $13.2150 | $12.9430 | $0.27 | 0.80% | 14.59% |
| Corn | $3.8850 | $3.8525 | $0.03 | 10.76% | -4.55% |
| Crude oil (NYMEX) (per barrel) | $46.25 | $47.03 | -$0.78 | 3.33% | 3.70% |
Rate this Article
High