April 16 – 20, 2012
After a two-day drop of 1% in the S&P, Friday’s rally helped the index close .12% higher, advancing its year- to-date gain of 9.6% according to Bloomberg. The two-day fall came after Spain held a debt auction that failed to quell looming fears that Spain might be on track to miss budget deficit targets set by economists, according to Reuters. Overall European fears have remained high as Italian, French, and Spanish bond yields have reached levels that investors feel are unsustainable. U.S. jobless benefits fell less than expected last week, which some suggest is an indication of a slowdown in job creation. These concerns proved to be the reasons for the two-day halt as earnings reports came out with better than expected numbers this week. The Dow advanced over 68 points on Friday, closing at 13,029 as over 85% of companies who have reported earnings beat Wall Street expectations. Along with positive earnings, reports show that German business confidence increased more than expected; many experts say that Europe’s largest economy has been underestimated while fears of its neighbors’ problems continue to linger. We have gotten mixed signals this week as a strong first quarter is overshadowed by weak economic data and fears over Europe’s debt crisis.
– Charles Stack
Article submitted by: Charles Stack of the Capital Markets Lab (CML). To learn more about the Capital Markets Lab (CML) please visit https://business.fiu.edu/capital-markets-lab/.