DJ30 PointChange: +75.91 Level: 11509.09 NASDAQ PointChange: +15.24 Level: 2622.31 NQ100 PercentChange: 0.9 R2K PercentChange: 0.1 SP400 PercentChange: 0.0 SP500 PointChange: +6.90 Level: 1216.01 NASDAQ-Adv:1396 Dec: 1224 NYSE-Adv:1521 Dec: 1465
[BRIEFING.COM] Quadruple Witching options expiration made for choppy action on Friday, but stocks still scored their fifth straight gain. That string of advances resulted in a weekly gain of 5.4%, which is the best weekly performance since late June, but only the second weekly gain in eight weeks.
Trade this week started on a negative note as participants reacted to speculation that some of France's primary financial institutions would have their debt downgraded. Such speculation would eventually prove prescient later in the week, when analysts at Moody's cut ratings on Societe Generale and Credit Agricole, but on Monday the attention turned to rumors that a sovereign wealth fund from China was talking with Italy about a bond purchase. That news helped stocks stage a rally, which gained traction as short sellers were squeezed out of their positions.
A similar scenario played out on Tuesday, when stocks benefited from headlines that suggested BRIC countries -- that is, Brazil, Russia, India, and China -- began talks to purchase eurozone debt. The headlines supported the notion that some now see value in Europe, which has been a source of weakness for several weeks because of its precarious fiscal and financial conditions.
That said, participants gained further confidence that the dealings in Europe are headed in the right direction because of news that the European Central Bank has coordinated with other central banks, including the Fed, to make dollar loans available to European banks.
By the end of the week, sentiment had improved to the extent that many traders were compelled to make bids for no better reason than to chase gains. In doing so, many shrugged off underwhelming data.
Among this week's major economic releases, retail sales for August were flat, which is less than the 0.2% increase that had been broadly expected. Excluding autos, retail sales increased by 0.1%, but that still failed to meet the 0.3% increase that had been widely anticipated.
The Producer Price Index for August was flat, as had been generally forecasted. Core producer prices increased by a mere 0.1%, which is essentially on par with the 0.2% increase had been anticipated. Meanwhile, overall consumer prices for August increased by 0.4%, which is greater than the 0.2% increase that had been broadly expected. Core consumer prices increased by 0.2%, as had been anticipated, however.
The latest weekly initial jobless claims tally totaled 428,000, which exceeded the 410,000 initial claims that had been broadly expected. Moreover, the latest initial claims total is up 11,000 from the prior week.
As for manufacturing activity, the Empire State Manufacturing Survey for September fell to -8.8 from -7.7 in the prior month. It had been expected to come in at -4.0, based on the Briefing.com consensus. In a similar vein, the Philadelphia Fed Survey for September came in at -17.5, which is an improvement from the -30.7 that was posted in the prior month, but still below the -10.0 that had been expected among economists surveyed by Brieifng.com.
In the corporate space, news that Broadcom (BRCM 35.67, +0.35) will acquire NetLogic (NETL 48.33, +0.22) for $50 per share, which represents a hefty premium over last week's closing price, helped semiconductor stocks lead the tech sector to a strong week. As a sector, tech climbed about 7% this week, but the Philadelphia Semiconductor Index advanced almost 10%.
Strength among semiconductors helped the Nasdaq outperform the Dow and S&P 500 in a few sessions, but not everything in the Nasdaq was so cheery. Netflix (NFLX 155.19, -8.31) and Research In Motion (RIMM 23.93, -5.61) both saw their market caps slashed this week in response to disappointing forecasts.
Best Buy (BBY 25.43, -0.25) was another poor performer. The company had the structure of its business model called into question after it reported earnings that failed to meet what Wall Street had expected.