May 16th 2014 – Dow and S&P Lower for the Week

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Market View:

The expected bounce came today.  A push back towards the All-Time High should happen again next week in my opinion.  Barring political turmoil over the weekend I expect the bounce to continue on Monday.

Strength also came in the Russell 2000, as it reached the 10% correction number.  Great housing starts number, may the good news roll on.

Market News:

Stocks staged a final-hour comeback to close in positive territory in choppy trading, putting an end to two days of sharp declines, but the Dow and S&P 500 still ended lower for the week.

Housing starts jumped 13.2 percent to a seasonally adjusted annual pace of 1.07 million units, according to the Commerce Department. The reading was the best since November 2013. And building permits hit their highest level since 2008.

Meanwhile, consumer sentiment slipped to 81.8 in May, according to the Thomson Reuters/University of Michigan’s preliminary reading. The reading was down from 84.1 from the month before and was also below the expectation of 84.5 among economists polled by Reuters.

St. Louis Federal Reserve President James Bullard said he sees inflation picking up in the near future and approach the central bank’s 2-percent target. He added that he considers the neutral Fed funds rate to be 4 percent, factoring in 2-percent inflation.

So far, 93 percent of S&P 500 companies have posted quarterly results, with 69 percent of firms topping earnings expectations and 22 percent missing estimates.

European shares failed to bounce back after Thursday’s global selling, which was prompted by anxiety over slow growth, low inflation and hefty valuations. U.S. shares fell for a second session on the day, with the Dow Jones down triple digits. The S&P 500 lost 1 percent each while the Nasdaq closed down 0.8 percent. Small-cap stocks weighed on Thursday, as the Russell 2000 briefly hit correction territory before pulling back.

The Russell will continue to be in focus on Monday. While the index is currently 9.3 percent away from its early March record of 1,208.65 – less than the 10 percent decline that marks a correction – it has closed below its 200-day moving average in the past two session, a sign of weakening momentum.

Monday: Fed’s Fisher speaks, Cisco investor day; Earnings from Campbell Soup, Urban Outfitters

News Sources:  CNBC and CNN Money

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