Last week ended much as it started, with a strong U.S. dollar, weak stock market, and sliding commodities. Worries over Greece’s economy and China’s move to tighten interest rates dominated Friday’s session. 

Investors ignored domestic economic data, like an increase of 0.5% in January’s advance sales figures, which was better than expected. But they also ignored the lower-than-expected preliminary University of Michigan Consumer Sentiment Survey reading of 73.7 for February, so perhaps one offset the other.

By late morning, the Dow Jones Industrial Average (DJI) was down 160 points, led by Alcoa (AA), which had been negatively impacted by falling metal prices. But some of the big technology stocks led afternoon trading with Motorola (MOT) gaining 7.5% and Intel (INTC) up 1.8%. 

At the close, the Dow was down 45 points to 10,099, and the S&P 500 (SPX) fell 3 points to 1,076, but the Nasdaq (NASD) gained 6 points to 2,184. 

The NYSE traded 1.4 billion shares with advancers ahead of decliners by 8-to-7. On the Nasdaq, 730 million shares changed hands with advancers ahead of decliners by 3-to-2 due to a rally in the technology sector.

For the week, the Dow rose 0.9%, the S&P 500 gained 0.9%, and the Nasdaq gained 2%.

March crude oil fell 1.5% to $74.13 a barrel, and the Energy Select Sector SPDR (XLE) closed at $5.59, up 2 cents. 

February gold settled down $4.70 to $1,089.50 an ounce, and the PHLX Gold/Silver Sector Index (XAU) lost 1.10, falling to 159.60.

What the Markets Are Saying

Sometimes we tend to focus so intensely on the near-term movement of the markets that we ignore the big picture. So let it be said that the overall trend of the U.S. stock market is still up, and that only the short-term and intermediate-term trends are down. The current correction is all very normal with the decline reaching almost 9% on Friday, Feb. 5, in the Dow.

The S&P 500 did a good job holding within a very narrow range by beating back several attempts to break the index below 1,060. Each attempt was met with modest buying, the most noteworthy being that of Feb. 5, when each of the major indices scored a key reversal.  That reversal is still in effect.

So the bears have given it their best shot so far, but instead of breaking to new lows, the market again rebounded Friday with the S&P 500 turning up from its 200-day moving average. The afternoon’s trading was impressive when in the nick of time the bulls turned a triple-digit Dow decline at noon into just a modest loss. The Nasdaq even scored a gain along with 3-to-2 positive breadth on the day before a three-day holiday weekend.

Last week’s rebound could run into resistance at the 20-day moving average at S&P 1,093, and then at the prior high just above 1,100. But a violation of the Feb. 5 low at 1,044 could result in a quick decline to the 200-day moving average at 1,026. 

Today’s Trading Landscape

Earnings to be reported before the opening include: Abercrombie & Fitch, Advanced Energy, AGA Medical Holdings, Capella Education, CBIZ, CF Industries, China Real Estate, DG FastChannel, Double Hull Tankers, Drew Industries, Fossil, Genuine Parts, FTX, Kraft Foods, Merck, Neutral Tandem, PAR Technology, Pioneer Drilling, Qwest Communications, Stoneridge, Teva Pharmaceutical, United Therapeutics and Valspar.

Earnings to be reported after the close: Aaron’s, American Campus Communities, American Medical Systems, Chemspec International, Cray, FMC Technologies, Given Imaging, Global Crossing, Healthways, InnerWorkings, Jarden, La-Z-Boy, LECG Corp, Masimo, Meadowbrook Insurance, Montpelier Re Holdings, Nabors Industries, Newfield Exploration, Pacer, Rackspace Hosting, Regal Entertainment, RSC Holdings, Schawk, Switch & Data, ValueClick, Watts, Whole Foods Market and Winn-Dixie Stores.

Economic reports due: Empire State Manufacturing Survey (the consensus expects 18), Treasury international capital and housing market index.

Quarterly earnings news (earnings vs. estimated):

• Kraft Foods (KFT): 48 cents vs. 45 cents
• Merck (MRK): 79 cents vs. 79 cents
• Pioneer Drilling (PDC): 16 cents vs. 25 cents
• Teva Pharmaceutical (TEVA): 94 cents vs. 95 cents

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