The major indices closed higher for the third straight week following a better-than-expected jobs report that showed nonfarm payrolls rose by 242,000 and the unemployment rate was unchanged at 4.9%.
On Friday, the Dow Jones Industrial Average rose 0.4%, the S&P 500 climbed 0.3% and the Nasdaq rose 0.2%. But all three remain under water for the year and safe havens such as gold and U.S. government bonds are still buyer favorites.
With the Q4 earnings season almost wrapped up, FactSet reports profits of S&P 500 companies declined 3.4% from the same quarter a year ago. And earnings are expected to fall 8% in the first quarter. FactSet also notes the S&P 500 is trading with a trailing P/E of 17.5, significantly pricier than its 10-year average.
Gold was up more than 4% last week at $1,269.90 an ounce. In addition to investors favoring gold and bonds, The Wall Street Journal reports stock trading volumes have fallen. In the next week and a half, investors’ focus is likely to shift to the Federal Reserve’s March 15-16 policy meeting.
At Friday’s close, the Dow Jones Industrial Average gained 63 points at 17,007, the S&P 500 rose 7 points to 1,082, the Nasdaq added 10 points at 4,717 and the Russell 2000 was up 6 points at 1,082.
The NYSE Composite’s primary exchange traded 1.4 billion shares with total volume of 6 billion. The Nasdaq crossed 2.2 billion shares. On the Big Board, advancers outpaced decliners by 1.8-to-1, and on the Nasdaq advancers were ahead by 1.5-to-1. Block trades on the NYSE increased to 8,785, up from 7,165 on Thursday.
For the week, the Dow rose 2.2%, the S&P 500 gained 2.7%, the Nasdaq was up 2.8% and the Russell 2000 jumped 4.3%.
The Dow Jones Industrial Average broke above the first line of resistance at 16,680 last week, but note the low volume and overbought MACD indicator. The next resistance line is at 17,175, which is just below the 200-day moving average at 17,182. This is a notable area of resistance and, if exceeded, could lead to a challenge of the bearish resistance line at about 17,600.
Conclusion
The public is still very cautious, as demonstrated by their purchases of gold and interest-rate sensitive investments. I am of the opinion that the recent buying is a result of bargain hunting in energy stocks, banks, etc., which are geared toward the advancing price of crude oil. Our focus for the immediate future will be oil prices.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
