By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks on Friday advanced to a
fourth weekly gain, with both the Dow industrials and the S&P
500 at all-time closes, after data cast a positive spin on the
economy.
The Conference Board's leading economic index rebounded in April
from a downwardly revised reading in March. Separately, the initial
May reading of the University of Michigan and Thomson Reuters
consumer-sentiment index jumped more than expected, according to
news reports.
"Certainly economic data support the market rising, and there is
still a huge element related to quantitative easing for sure,"
Randy Frederick, managing director of active trading and
derivatives at Charles Schwab, said of ongoing monetary easing by
the U.S. Federal Reserve.
That easing, which has involved three rounds of bond buying by
the Fed, along with better-than-projected corporate earnings, has
fueled a bull run, which entered a fifth year in March.
"We may have been in a bull market even if there was no
quantitative easing and interest rates were normalized, but we
would have had a far worse recession than we had," Frederick
said.
Up 145% from a dozen-year low in 2009, the S&P 500 (SPX) is
up nearly 17% for the year so far.
On Friday, the S&P 500 climbed 11.95 points to 1,662.42,
with energy leading gains and consumer staples the worst performing
of its 10 sectors, with the index climbing 1.8% on the week.
Equities retreated Thursday after a Fed official indicated the
central bank might begin tapering back on its asset purchases
should the economy continue to improve.
"When the Fed does finally make a statement, I think the market
will certainly pull back, and it has room. Geez, we could have a
15% correction and only be back at where we started the year," said
Frederick.
Rising 1.6% for the week, the Dow Jones Industrial Average (DJI)
rose 121.18 points on Friday to 15,354.40, with J.P. Morgan Chase
& Co. (JPM) leading blue-chip gains.
Off the Dow, Northrop Grumman Corp. (NOC) gained 4% after the
weapons manufacturer said it would expand its share-buyback
program.
The Nasdaq Composite (RIXF) advanced 33.72 points to 3,498.97,
up 1.8% from the week-ago finish.
For every stock falling, nearly three gained on the New York
Stock Exchange, where 750 million shares traded.
Composite volume exceeded 3.3 billion.
Limiting gold
The U.S. dollar index (DXY) on Friday rose to a nearly
three-year high against currency rivals. The greenback climbed
above 103 Japanese yen (USDJPY) for the first time since October
2008.
The greenback's climb helped propel gold towards a seventh down
session, with gold for June delivery (GCM3) ending down $22.20 at
$1,364.70 an ounce.
"Gold is darn near impossible to predict and is a good example
of why bottom-fishing is hard to do. Almost nobody predicted the
major meltdown we had in April, and we're about right back where we
were at the bottom of that selloff," said Frederick.
Longer term, gold works in inverse of the dollar, but those
trading the precious metal are largely left with technical factors,
as "there are no fundamentals on gold. There are no earnings, no
P/E (price-earnings) ratios, no new CEOs to consider," said
Frederick, who adds that Schwab advises clients to limit gold to no
more than 5% of their overall holdings.
Treasurys declined, with the yield on the 10-year note (10_YEAR)
rising to 1.953%.
Oil futures for June delivery (CLM3) lost 2 cents this week to
finish at $96.02 on the New York Mercantile Exchange.
On Thursday, benchmark indexes fell, with the S&P 500
halting a four-session winning run.
"We had a whole pile of soft-patch data this week; the majority
of the economic data was either neutral or negative, and the market
really didn't show any weakness until late yesterday, which shows
the resilience of this market," said Frederick.
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