Stocks End The Week With An Advance

An upbeat report on consumer spending sent stocks slightly higher on Friday.

Friday’s report on Personal Income and Outlays , from the Commerce Department’s Bureau of Economic Analysis, provided more evidence that the disappointing economic reports during the past few months were influenced by the harsh winter weather.  Consumer spending – also known as Personal Consumption Expenditures or PCE – rose by 0.3 percent in February, compared with January’s 0.2 percent increase.

So-called “PCE inflation” is closely-watched by the Federal Reserve as its key factor in measuring the inflation rate.  The February PCE reading reached its highest level since November, providing more support for the theory that the weather was to blame for the winter’s weak economic reports.  As a result, many economists are expecting a higher PCE reading for March.  

The Dow Jones Industrial Average (DIA) picked up 58 points to finish Friday’s trading session at 16,323 for a 0.36 percent advance.  The S&P 500 (SPY) climbed 0.46 percent to 1,857.

The Nasdaq 100 (NASDAQ:QQQ) advanced 0.23 percent to finish at 3,571.  The Russell 2000 (ARCA:IWM) rose 0.03 percent to 1,151.

In other major markets, oil (USO)) advanced 0.33 percent to close at $36.62.

On London’s ICE Futures Europe Exchange, June futures for Brent crude oil advanced 16 cents (0.15 percent) to $107.88/bbl. (BNO).

June gold futures  declined 30 cents (0.02 percent) to $1,294.50 per ounce (GLD).  

The transportation sector was back in the express lane during Friday’s trading session, as the Dow Jones Transportation Average surged 0.54 percent to 7,451 (IYT).

In Japan, the exchange rate for the yen remained the dominant factor in stock market activity.  Japanese stocks advanced as the yen maintained its weakness from its previous closing exchange rate of 102.18 per dollar.  As has been the case quite frequently, once the closing bell rang on the Tokyo Stock Exchange, the yen abruptly gained unwanted strength.  Thirteen minutes after Friday’s closing bell, the yen strengthened to 102.04 per dollar.  A weaker yen causes Japanese exports to be more competitively priced in foreign markets (FXY).  The Nikkei 225 Stock Average advanced 0.50 percent to 14,696 (EWJ).

Stocks continued their decline in mainland China in the wake of Thursday’s report from the National Bureau of Statistics, which indicated that during the first two months of 2014, profits for Chinese industrial businesses rose only 9.4 percent, compared with a 17.2 percent increase during the same period last year.  The Shanghai Composite Index declined 0.24 percent to 2,041 (FXI).  Meanwhile, in Hong Kong, strong earnings reports from the banking sector brought a Friday rally.  Hong Kong’s Hang Seng Index jumped 1.06 percent to 22,065 (EWH).

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In Europe, stocks surged after the European Commission reported that the Economic Sentiment Indicator (ESI) for the Eurozone increased by 1.2 points to 102.4, catching up with the ESI for the greater 28-nation European Union, which rose 0.3 points to 105.3.  The Euro STOXX 50 Index jumped 1.23 percent to 3,172 – climbing further above its 50-day moving average of 3,084.  Its Relative Strength Index rose from 57.18 to 62.06 (FEZ).

Technical indicators revealed that the S&P 500 rose further above its 50-day moving average of 1,834 on Friday, after a 0.46 percent advance to 1,857.  Its Relative Strength Index (RSI) surged from 48.43 to 51.86.  The MACD is still fading below the signal line, suggesting that the S&P could resume its decline during the immediate future.

On Friday, all sectors advanced except for the healthcare sector, which declined by 0.38 percent.

Consumer Discretionary (ARCA:XLY):  +0.75%

Technology: (XLK):  +0.39%

Industrials (ARCA:XLI):  +0.74%

Materials: (ARCA:XLB):  +0.69%

Energy (ARCA:XLE):  +1.25%

Financials: (ARCA:XLF):  +0.41%

Utilities (XLU):  +0.15%

Health Care: (ARCA:XLV):  -0.38%

Consumer Staples (ARCA:XLP):  +0.26%

Bottom line:  An upbeat report on February’s consumer spending level helped boost investor enthusiasm on Friday, sending the major stock indices moderately higher to close out an otherwise awful week.

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Written By: Wall Street Sector Selector