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Saturday, 18 February 2012 | 00:00
DJ30 PointChange: +45.79 Level: 12949.87 NASDAQ PointChange: -8.07 Level: 2951.78 NQ100 PercentChange: -0.3 R2K PercentChange: -0.2 SP400 PercentChange: -0.2 SP500 PointChange: +3.19 Level: 1361.23 NASDAQ-Adv:1282 Dec: 1246 NYSE-Adv:1704 Dec: 1271
[BRIEFING.COM] The broad market mustered a modest gain on Friday, feeding a 1.4% gain for the week. The climb has the S&P 500 at a new nine-month high.

A steady climb in the prior session was followed by only modest buying this morning. Many participants seemed hesitant to commit new money to the market now that it is up more than 25% from its October intraday low. The hesitation allowed stocks to drift lower, but the broad market was able to find support at the flat line. From there it gradually worked its way to a narrow gain, which helpd feed the stock market's sixth weekly advance in seven weeks.

Financials offered support by climbing to a 0.6% gain, but consumer discretionary stocks were the session's best performers with their 0.8% climb.

Tech stocks, which represent the largest sector by market weight, lagged all session and settled with an incremental loss. Still, relative weakness among tech issues weighed on the Nasdaq, which had actually outperformed its counterparts in the prior session to book its best close since late 2000.

Hardly any commotion came in response to headlines that both the House and Senate have passed payroll tax extensions since both were widely expected to do so.

There weren't any official updates on the dealings between officials from Greece and the eurozon, but the euro managed to attract some support. It finished the week near $1.32. That made for a 0.2% gain on Friday, but a 0.3% loss for the week.

The expiration of monthly options drove share volume higher, but the number of shares exchanged on the NYSE still didn't come anywhere close to breaking 1 billion.

Global Themes for the Week

Earlier this week China's officials expressed their intent to expand their coutnry's investment in Europe. That helped bolster confidence in the precarious eurozone.

Greece's parliament approved austerity measures last weekend, but market participants became concerned that efforts to get the flagging country bailout funds will remain bogged down because of stories suggesting that eurozone officials question the sincerity of Greece's commitment to measures intended to shore up fiscal and financial conditions.

Even though most of the market's concern is on Greece, and other countries in the eurozone periphery, market participants were reminded of precarious conditions in the core of Europe when analysts at Moody's issued negative outlooks on France, Austria, and the United Kingdom. Meanwhile, headline GDP for the fourth quarter featured a 0.3% decline for the eurozone, a 0.2% decline in Germany, and a 0.2% increase in France.

Corporate Developments

Consistent with the the patterns and trends of the past several weeks, earnings announcements had little influence over broad market trade, but they did drive stock-specific swings.

Among the more widely held names that reported this past week, Comcast (CMCSA 29.17, +0.52), Teva Pharma (TEVA 44.65, +0.50), Deere & Co. (DE 83.87, +0.76), Marsh McLennan (MMC 32.22, +0.72), MetLife (MET 38.86, +0.19), HJ Heinz (HNZ 54.47, +2.37), and Nordstrom (JWN 51.14, -1.04) all posted Upside earnings surprises. Abercrombie & Fitch (ANF 48.48, -0.01), General Motors (GM 27.34, +0.17), Enbridge (ENB 37.73, -1.65), and Marriott (MAR 34.93, +0.11) missed the consensus estimate.

Separately, Kellogg (K 52.53, -0.03) announced that it has agreed to acquire the Pringles brand from Procter & Gamble (PG 64.91, -0.29) for nearly $2.7 billion. SanDisk (SNDK 47.79, -0.44) announced it has agreed to acquire FlashSoft, but the financial terms of the deal were not disclosed.

A bevy of major banks and financial institutions, including Bank of America (BAC 8.02, -0.07), Citigroup (C 32.92, +0.21), JPMorgan Chase (JPM 38.47, +0.47), were thrown into a negative light when analysts at Moody's decided to review their ratings. The news only temporarily slowed the ascent of financials and bank stocks, which have taken the KBW Bank Index up to a new multi-month high.

Although there weren't any driving headlines, Apple (AAPL 502.12 -0.09) experienced some mid-week volatility that sent the stock retreating from a record high above $525 per share, which reflected a climb of more than 25% since it reported earnings barely a month ago. Given that the stock is the single largest by market cap, its movement pulled the broad market along with it.

Data Review

The latest weekly initial jobless claims tally made a surprise drop to 348,000. That stands as a near four-year low and is consistent with the steady decline in claims reaching back to the beginning of the year.

Housing starts improved in January to an annualized rate of 699,000 from an upwardly revised rate of 689,000 in the prior month. That surpassed the pace of 671,000 housing starts that had been broadly expected. What's more, the three-month moving average hit a rate of 697,000 units, which stands as a three-year high. That suggests that builders expect demand to strengthen and supports the idea that the housing market is improving.

Measures of both consumer prices and core consumer prices in January increased by 0.2%, contrasting with calls for a 0.3% increase in overall prices and a 0.1% increase in core prices. Overall consumer prices climbed 2.9% from the prior year, but core consumer prices climbed 2.3% year over year for their sharpest annual increase snce 2008.

Total producer prices were up 0.1% in January as a drop in residential energy and gas prices offset higher gasoline prices. Meanwhile, a run up in pharmaceutical costs drove core prices 0.4% higher for their biggest jump since summer. Respective increases of 0.3% and 0.1% had been expected, on average, among economists polled by

Leading Indicators climbed by 0.4% in January for their fourth consecutive increase, but economists polled by had generally expected a 0.5% jump. The actual score was hampered by some unexpected weakness in manufacturer orders of consumer goods and non-defense capital goods that exclude aircraft.

The Philadelphia Fed Survey improved in February to 10.2 from 7.3 in the prior month. Economists had generally expected a reading on the order of 10.0, so the improvement wasn't a complete surprise. Underlying data showed a pickup in unfilled orders, which should provide production stability into next month.

The Empire Manufacturing Survey imrpoved to 19.5 in February from 13.5 in the prior month, surpassing the reading of 14.0 that had been widely anticipated.

News that industrial production in January was flat disappointed since the consensus among economists polled by called for a 0.6% increase after industrial production had increased by 1.0% in the prior month.

Overall retail sales for January increased by 0.4% following flat sales in the prior month, but a much stronger increase of 0.8% had been broadly expected. Slower-than-expected clip came as auto sales stalled. Taking autos out of the equation, retail sales actually climbed by 0.7%, which bested the 0.5% increase that had been widely predicted to follow a 0.5% decline in the prior month.

Total business inventories increased in December by 0.4%, which is slightly less than the 0.5% increase that had been broadly expected to follow the 0.3% increase in the prior month. Underlying data is thought unlikely to have any significant effect on revisions to the headline GDP number for the fourth quarter.

The only relative surprise to minutes from the most recent FOMC meeting was that Regional Fed President Lacker made it known that he believes exceptionally low levels of the federal funds rate, which stands at 0.00% to 0.25%, may need tightening prior to the end of 2014 so as to prevent inflation projections or expectations.

Source: Briefing

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