The S&P 500 rose 0.8 percent for the week, scoring a weekly gain for
the first time since early January. The benchmark index closed above
its 14-day moving average on Friday, the first time it traded above
that level since January 23.
The 2.6 percent gain for Thursday and Friday marked the S&P 500's
best two-day performance in four months. That rally helped Wall
Street recover some ground from the latest slide, which had pushed
the benchmark index down as much as 6 percent from its record
closing high set on January 15. Wall Street defines a stock market
correction as a drop of at least 10 percent from the previous high.
A bear market is a plunge of 20 percent from a previous peak.
The recent selloff has created some severely oversold conditions
that have "now blossomed into buy signals, but there is still a much
larger intermediate-term bearishness in place," Larry McMillan,
president of McMillan Analysis Corp in Morristown, New Jersey, said
in a note to clients.
"The buy signals may generate a rally back to and through the 20-day
moving average. But for anything more than that, the
intermediate-term sell signals have to be reversed."
The S&P 500 fell 3.6 percent in January, its worst monthly loss
since May 2012. Its 20-day moving average is currently at 1,804.25.
In another check of the U.S. economy's health, January retail sales
will be in focus. The data could offer more evidence that the
economy lost some momentum at the start of the first quarter.
On Friday, nonfarm payrolls data showed job creation in the United
States slowed sharply over the past two months, raising the prospect
that the economy may be losing strength.
Federal Reserve Chair Janet Yellen will be in the spotlight as she
testifies before U.S. lawmakers next week in her first public
comments on monetary policy and the economy after taking the reins
at the U.S. central bank. She will appear before the House Financial
Services Committee on Tuesday and the Senate Banking Committee on
Yellen, a strong supporter of the Fed's easy-money policies,
will be responsible for ramping down a huge bond-buying program and,
later, raising interest rates and shrinking the Fed's swollen
[to top of second column]
FINAL CHRISTMAS SNAPSHOT
The Commerce Department is expected to report on Thursday that
retail sales were flat in January, held down by a drop in receipts
at auto dealerships, after rising 0.2 percent in December. Even
after stripping out autos, retail sales are seen barely rising.
"That retail number is actually important because it includes the
January gift card numbers, so that completes the Christmas picture,"
said Phil Orlando, chief equity market strategist at Federated
Investors, in New York.
On Thursday, a group of nine retailers that report comparable
monthly sales posted a 3.6 percent rise for January, below the 4.9
percent pace a year earlier, according to Thomson Reuters. The data
suggested that January was a tough end to the most competitive
holiday season for U.S. retailers since the 2007-2009 recession.
Next week's economic calendar will include weekly jobless claims on
Thursday and January's industrial output on Friday. The preliminary
February reading on consumer sentiment will also be released on
Friday by Thomson Reuters and the University of Michigan.
On Monday, McDonald's Corp <MCD.N> will report January sales. Last
month, the company reported weaker-than-expected quarterly sales at
established restaurants as fewer diners frequented the fast-food
chain. McDonald's warned that sales would again fall short of
analysts' expectations in January.
On the earnings front, companies ranging from Sprint Corp <S.N> to
Cisco Systems Inc <CSCO.O>, Deere & Co <DE.N>, PepsiCo Inc <PEP.N>
and MetLife Inc <MET.N> will report their results.
Thomson Reuters data showed that of the 343 companies in the S&P 500
that had reported earnings through Friday morning, 67.9 percent have
topped Wall Street's expectations, slightly above the 67 percent
beat rate for the past four quarters and ahead of the 63 percent
rate since 1994.
(Reporting by Angela Moon; additional
reporting by Chuck Mikolajczak; editing by Jan Paschal)
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