S&P 500 Index declines for the first week in seven
Friday brought a rally for the S&P 500 Index (NYSEARCA:SPY) and other major U.S. stock indexes, however, for the week, the S&P 500 Index (NYSEARCA:SPY) and most other major U.S. indexes declined.
The S&P 500 Index (NYSEARCA:SPY) fell 0.3% on the week, the Nasdaq (NYSEARCA:QQQ) lost 1% and the Dow Jones Industrial Average (NYSEARCA:DIA) eked out a 0.1% gain, managing to barely reclaim the coveted 14,000 level with a closing price of 14,000.57.
Read “Stocks Finish Worst Week of 2013 On High Note”
In other major markets, gold (NYSEARCA:GLD)
gained 0.19% on Friday to close at $1579.60 while oil (NYSEARCA:USO)
added 0.3% to finish the week at $93.27. Both gold (NYSEARCA:GLD)
and oil (NYSEARCA:USO) suffered sharp declines as the future of the
Federal Reserve’s program of quantitative easing came into doubt after
release of the FOMC meeting minutes on Wednesday.
On My ETF Radar
chart courtesy of StockCharts.com
In the chart of the S&P 500 Index (NYSEARCA:SPY)
above, we can see how RSI has come off overbought levels near 70 to a
more normal mid range in the 50s. Momentum continues to decline and the
S&P 500 Index (NYSEARCA:SPY)
finds itself locked in a narrow sideways range between support at the
1500 level at 1530. This narrow channel has been in play for almost a
month and will have to break higher or lower, sooner or later.
ETF News You Can Really Use
Good news on Friday came from a German business sentiment survey that
showed improvement and markets cheered Hewlett Packard after the
company released its earnings.
Not so good news came from a falling U.S. home builders confidence
index and initial jobless claims which climbed by 21,000 on Thursday.
The European region is forecast to suffer a decline in GDP of 0.3% for
the year and U.S. housing starts declined sharply in January to 890,000
from the previous month’s reading of 973,000.
Other negative economic reports included February’s Markti Flash PMI
declining to 55.2, down from 55.8 in January, the Philadelphia Fed
report taking a sharp fall to -12.5 in February compared to January’s
-5.8, and leading indicators declining slightly in January to 0.2% from
On Wednesday, the Federal Reserve FOMC meeting minutes rattled
markets when it was revealed that there is growing concern about the
risks, benefits and costs of the Fed’s asset buying program and how it
is affecting financial markets. The Fed has decided to do more analysis
into the cost/benefits of its quantitative easing program, and this
hint of doubt set off a storm of selling in risk assets including
commodities, precious metals and stocks.
Next week brings significant market moving news, starting with the
Italian election and comeback try of Silvio Berlusconi and ending on
Friday with the sequestration deadline.
Read “Must Know ETFs for Italy’s Election”
Regarding the sequestration deadline of March 1st, neither
politicians nor financial market participants seem to be particularly
worried about the impending government cuts set to trigger that day, but
with Congress on vacation and both sides seemingly digging in, next
week could be suspenseful as the clock ticks down to Friday.
In economic news next week, reports from the housing market include
Case/Shiller home price index, new home sales and consumer confidence on
Tuesday, while Thursday brings a closely watched revision to Q4 GDP
which initially came in at -0.1% but now is forecast to rise into
positive territory, and Chicago PMI.
Friday brings reports focusing on consumer spending and savings, the
closely important ISM report for February, University of Michigan
Consumer Sentiment and January Construction Spending. But the big news
to close out the week will be whether or not the sequestration deadline
is averted and how the outcome impacts the S&P 500 (NYSEARCA:SPY) and other global financial markets.
Bottom line: The S&P 500 Index (NYSEARCA:SPY)
and other major U.S. stock indexes and sectors face major challenges in
the upcoming week as significant economic reports are released and the
sequestration deadline is hit.
02-24-2013 5:26 PM