US Stocks End With First Weekly Gain Since Christmas
New York (Jan 23) We ended the week on a happy note, but we're not out of the woods just yet. Stocks closed out the day with their first weekly gain in a month as a surge in crude oil prices triggered a rally in the energy sector and bets of more stimulus out of the eurozone boosted global markets.
The S&P 500 was up 2%, the Dow Jones Industrial Average rose 1.3%, and the Nasdaq climbed 2.7%. The S&P 500 was on track for a weekly gain of 1.4%, its first since the week of Christmas.
But we may not have come to the end of this series of selloffs with worries over crude oil oversupply and China's economy still feeding investor anxiety.
"It's going to continue to be volatile," Aaron Jett, vice president of global equity research at Bel Air Investment Advisors, told TheStreet. "There's definitely a perceived heightened level of uncertainty in the market right now. When people aren't decisive with whether they want to be long or short or whatever the case may be, they just sell and ask questions later."
After a terrible start to the year, though, the rally in crude oil and equities was a welcome relief. Crude oil prices jumped above $32 a barrel again after sinking to fresh 12-year lows earlier in the week. West Texas Intermediate was up 9% for the session, its best one-day gain since August.
"The crude complex is surging higher today even as the oil market continues to be dominated by oversupply," Robbie Fraser, commodity analyst at Schneider Electric, wrote in a note. "Broader strength in global markets has assisted in the climb."
Energy stocks were the best performers on markets Friday. Major oilers including Exxon Mobil (XOM - Get Report) , Chevron (CVX) , Shell (RDS.A) , Total (TOT) and BP (BP) were higher, while the Energy Select Sector SPDR ETF (XLE) added more than 4%.
The oil industry remains in crisis, though. Moody's placed 120 oil-and-gas companies on review for downgrade on Friday. Crude oil prices have fallen nearly 50% in the past 52 weeks.
We're only one-sixth of the way through earnings season (just 15% of S&P 500 companies have reported), and analysts hope the focus on individual companies' performances could distract from global and commodities markets.
"Now that we're into earnings season we can focus a little bit more on fundamentals of individual companies instead of the constant headline risk," argued Jett. "Hopefully the market can move more towards fundamentals and less toward the daily noise."
It was a mixed bag for earnings on Friday. American Express (AXP - Get Report) fell after reporting a 38% drop in quarterly earnings, while General Electric (GE - Get Report) saw sales fall 20% from a year earlier.
Starbucks (SBUX - Get Report) was higher despite issuing weaker guidance than analysts expected. The coffee chain said it expects adjusted second-quarter earnings no higher than 39 cents a share, a penny below forecasts.
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Schlumberger (SLB - Get Report) climbed 6% after reporting a better-than-expected quarter despite a weaker commodities environment. The oilfield services provider earned 65 cents a share in its fourth quarter, more than half a year earlier, but 2 cents above estimates. The company also said it slashed another 10,000 jobs in the fourth quarter.
The Federal Reserve will dominate the economic calendar in the coming week with members meeting on Tuesday with a statement scheduled for Wednesday afternoon. Economists don't expect a change in monetary policy, though the statement's wording will be scrutinized for clues as to the pace of future rate hikes.
Elsewhere, more housing data will be released with the S&P/Case-Shiller home price index due out Tuesday and new home sales numbers due on Wednesday. The first estimate of fourth-quarter GDP will be released on Friday.