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Weekly Wrap Following last week's sharp sell-off, a two-session decline on Thursday and Friday left U.S. equity markets lower for a third consecutive week.
All 10 sectors that make up the S&P 500 closed unchanged or lower, led by Materials (-4.4%), IT (-3.7%) and Energy (-2.8%).
The major averages showed little direction through the first two and a half sessions of the week, ahead of three important events -- the FOMC meeting, President Obama's first State of the Union address and the Q4 Advance GDP report.
The FOMC in its policy directive repeated its line that it continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period, but the vote was not unanimous. Kansas City Fed President Hoenig believed that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels for an extended period was no longer warranted.
The initial move for the market was lower when the directive was released, but with added time for deliberation the prevailing message from the FOMC was that economic activity is picking up and the Fed is keeping the fed funds rate zero bound.
That night, President Obama focused on job creation instead of on banking reforms, a topic that had spooked financial markets last week. But the address played out very much as expected, and had little effect on the market.
What did have an effect Thursday morning was first a weaker-than-expected Initial Jobless Claims figure of 470,000 (consensus 450,000) and second a caustic headline generated by Standard & Poor's, which said it no longer classifies the United Kingdom among the most stable and low-risk banking systems globally. They led to an aggressive sell-off in the first two hours of trading, and after an attempted rebound, the market sold off sharply into the close, even after it became apparent that Fed Chairman Bernanke was likely to be confirmed to serve a second term.
The market attempted to rebound Friday morning following a better-than-expected Advance reading for Q4 GDP -- 5.7% vs. 4.8% consensus -- but the attempt quickly failed and hawkish comments from Fed Vice Chairman Kohn sent the dollar higher, helping the major averages slowly trend lower through the remainder of the session.
It was such a busy week that a large batch of Q4 earnings reports seemed to take a back seat. The news was good, but a number of stocks that have had big runs butted heads with the hurdle of high expectations and failed to move themselves or the broader market.
That exact scenario played out in large-cap tech names for a second straight week, as Apple (AAPL), Microsoft (MSFT) and SanDisk (SNDK) reported bottom-line beats due to cost cutting and easy analyst estimates that failed to inspire the market.
We'll have plenty more reports next week, including Exxon Mobile (XOM), BP (BP), UPS (UPS) -- though it preannounced, Pfizer (PFE), Cisco Systems (CSCO), Visa (V), MasterCard (MA) and Sony (SNE). The economic calendar is much thinner, that is until Friday when the always import Nonfarm Payroll figure and Unemployment Rate are released for January.
All 10 sectors that make up the S&P 500 closed unchanged or lower, led by Materials (-4.4%), IT (-3.7%) and Energy (-2.8%).
The major averages showed little direction through the first two and a half sessions of the week, ahead of three important events -- the FOMC meeting, President Obama's first State of the Union address and the Q4 Advance GDP report.
The FOMC in its policy directive repeated its line that it continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period, but the vote was not unanimous. Kansas City Fed President Hoenig believed that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels for an extended period was no longer warranted.
The initial move for the market was lower when the directive was released, but with added time for deliberation the prevailing message from the FOMC was that economic activity is picking up and the Fed is keeping the fed funds rate zero bound.
That night, President Obama focused on job creation instead of on banking reforms, a topic that had spooked financial markets last week. But the address played out very much as expected, and had little effect on the market.
What did have an effect Thursday morning was first a weaker-than-expected Initial Jobless Claims figure of 470,000 (consensus 450,000) and second a caustic headline generated by Standard & Poor's, which said it no longer classifies the United Kingdom among the most stable and low-risk banking systems globally. They led to an aggressive sell-off in the first two hours of trading, and after an attempted rebound, the market sold off sharply into the close, even after it became apparent that Fed Chairman Bernanke was likely to be confirmed to serve a second term.
The market attempted to rebound Friday morning following a better-than-expected Advance reading for Q4 GDP -- 5.7% vs. 4.8% consensus -- but the attempt quickly failed and hawkish comments from Fed Vice Chairman Kohn sent the dollar higher, helping the major averages slowly trend lower through the remainder of the session.
It was such a busy week that a large batch of Q4 earnings reports seemed to take a back seat. The news was good, but a number of stocks that have had big runs butted heads with the hurdle of high expectations and failed to move themselves or the broader market.
That exact scenario played out in large-cap tech names for a second straight week, as Apple (AAPL), Microsoft (MSFT) and SanDisk (SNDK) reported bottom-line beats due to cost cutting and easy analyst estimates that failed to inspire the market.
We'll have plenty more reports next week, including Exxon Mobile (XOM), BP (BP), UPS (UPS) -- though it preannounced, Pfizer (PFE), Cisco Systems (CSCO), Visa (V), MasterCard (MA) and Sony (SNE). The economic calendar is much thinner, that is until Friday when the always import Nonfarm Payroll figure and Unemployment Rate are released for January.
| Index | Started Week | Ended Week | Change | % Change | YTD % |
| DJIA | 10172.98 | 10067.33 | -105.65 | -1.0 | -3.5 |
| Nasdaq | 2205.29 | 2147.35 | -57.94 | -2.6 | -5.4 |
| S&P 500 | 1091.76 | 1073.87 | -17.89 | -1.6 | -3.7 |
| Russell 2000 | 617.12 | 602.04 | -15.08 | -2.4 | -3.7 |
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