Strong corporate earnings caused stocks to rally last week for the first time this month. The S&P closed up 0.6% for the week, while the Dow closed 1.4% higher, and the Nasdaq trimmed 0.36%. With no domestic economic reports released on Friday, traders turned their attention back to lingering concerns over Europe and China, and markets lost some momentum in afternoon trading. Even so, last week’s positive earnings reports are alleviating concerns about the economy and making investors feel more confident about the rallies we’ve seen this year. With 23% of S&P 500 companies having reported results so far, more than four out of five have beaten expectations by an average of 8.8%. Profit growth in this quarter has also been up 6.2%, according to Thomson Reuters Proprietary Research.
While some analysts are concerned that stocks are poised to repeat their 2010 and 2011 performance – when a mid-year retreat followed an April peak – there are many differences between the economy of the past two years and today. The 2010 and 2011 pullbacks largely occurred because of recession fears and shocks created by the Japanese Tsunami, but the U.S. economy is on more solid footing than at any other time in the recovery. Current indicators point to slow and steady economic growth, and we have already moved away from index highs. If we continue to see positive earnings among the nearly 180 S&P 500 components reporting next week, we may see markets sustain their upward trajectory.
Investors will also be closely watching Tuesday’s meeting of the Federal Reserve FOMC. With an optimistic economic outlook and improving jobs situation, it is unlikely that the Fed will conduct another round of bond purchases. Even so, we will be monitoring the Fed’s statement on Wednesday, and will be certain to fill you in on any outstanding developments. We hope you have a great week!
The information being provided is strictly as a courtesy. When you link to any of the websites provided herewith, you are leaving this site. We make no representations as to the completeness or accuracy of the information provided at these sites. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third party technology, sites, information and programs made available through these sites. By clicking on the links below you will leave our website and assume total responsibility and risk for your use of the sites to which you are linking.
 http://news.yahoo.com/earnings-fed-prove-skeptics-wrong-215428772–finance.html  http://www.reuters.com/article/2012/04/20/us-usa-stocks-weekahead-idUSBRE83J1JO20120420