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After The Close - The bulls controlled the narrative of the U.S. stock market on Friday, the final session of another up-and-down week for the major indexes. The gains were led by the NASDAQ, which benefitted from earnings-related developments. The broad-based S&P 500 and Dow Jones Industrial Average also enjoyed the accelerated rally in the final hours, pushing them into positive territory for the week. Market breadth favored advancing shares by a significant margin, with particular strength coming from utility and energy stocks, in addition to the technology sector.

Corporate earnings remain a largely positive influence, with today’s headlining outperformance coming from Hewlett Packard Enterprise (HPE). The enterprise services company’s stock rose about 10% after it updated guidance and announced a sizable repurchase authorization. Conversely, multinational consumer foods manufacturer General Mills (GIS) saw its shares tick 4% lower after it revealed its plan to buy natural pet food maker Blue Buffalo (BUFF) for $8 billion. Next week will see more than 450 companies report their quarterly results, including stalwarts from the retail, medical supply, and recreation industries, before earnings season begins to wind down in early March.

But it was speculation over interest rates that served as the main influence this week. This morning’s monetary policy report from the Federal Reserve indicated the central bank’s belief that the country is nearing full employment. This would ostensibly signal a more hawkish interest-rate strategy from the Fed in the future.  Inflationary pressures may also play an increased role in thinking going forward. Regardless, while Wall Street processed comments from some regional presidents today, next week’s Congressional meeting with newly minted Chair Jerome Powell may be the most telling factor in the market’s ongoing assessment of monetary policy.

Meanwhile, U.S. crude oil realized its second consecutive weekly gain. Positivity was supported by a decrease in domestic inventory levels, as well as an outage in a Libyan oil field. Both developments typify the two controlling forces of this commodity market: U.S. stockpiles and foreign production. With OPEC and its allies staying largely loyal to an extended drilling limit and stateside fundamentals slowly improving, the cautious optimism here is likely to persist for the foreseeable future. At the close, U.S. crude oil had risen roughly 1% in per-barrel value, to $63.39.

Looking ahead, interest rates and earnings will be the main factors in trading next week. Overall sentiment on the economy remains favorable, so the new Federal Reserve Chair’s remarks on Wednesday will be closely watched. Stay tuned. – Robert Harrington

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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Before The Bell - It continues to be all about interest rates. On point, this past Wednesday, the stock market had initially roared ahead and then took on an added head of steam in the early afternoon following the release of the Federal Reserve's minutes from its late-January FOMC meeting. Then, after an in-depth reading of those minutes suggested a more hawkish monetary tone had been adopted, the market did an about face and closed notably lower on the day. Of course, an increase in the 10-year Treasury note's yield to yet one more four-year high didn't help matters.

Then, yesterday, as those yields eased back ever so slightly, even though weekly jobless claims data came in lower than expected, suggesting more strength in the jobs market, stocks resumed their upsurge, with the Dow Jones Industrial Average, the largest casualty on Wednesday, leading the way higher, with an early morning advance of more than 350 points. That run-up more than countered the blue chip index's 254-point downdraft the day before. The market weaved back and forth as the morning and early afternoon unfolded, with the slight dip in the 10-year note's yield, from 2.94% to 2.92%, being a major help.      

According to some pundits, the market is range-bound, with the macro-economic environment still looking quite favorable, but with concerns about inflation and, therefore, interest rates. However, after that early and mid-session bounce yesterday, the market gave up a chunk of those gains, with the NASDAQ and the S&P Mid-Cap 400 going slightly negative as we moved into the final hour of trading. Concerns about interest rates are clearly dominating thinking, with some now suggesting that the minutes conveyed that the Fed is actually more concerned about inflation than the original FOMC statement indicated.

Such concerns aside, the market remained selectively higher into the final hour. Of course, such relative complacency would end quickly if the perception that interest rates would rise only gradually changed to one predicting a more aggressive upslope in borrowing costs. One report out yesterday, meanwhile, could possibly help change the rate perception. To wit, the Conference Board reported that the Leading Indicators increased by 1.0% in January--a very strong uptick. That followed gains of 0.6% during December and 0.4% in November.  

The Leading Indicators, therefore, continue to point to strong economic growth in the first half of this year. Indeed, the business outlook on the economy has been improving and should not be affected by the recent volatility in the stock market. Of course, that all could change if the volatility increases in the weeks and months to come. For now, though, the nation appears to be in a nice comfort zone. As to the market, the Dow remained strongly higher into the close, eventually posting an advance of 165 points, while the NASDAQ was off eight points and the S&P Mid-Cap and small-cap Russell 2000 Index also eased into the close.  

Looking ahead to the final day of this holiday-shortened trading week, we see that stocks across Asia were higher in overnight trading; in Europe, the leading bourses are posting some nominal early losses. Meantime, yields on the 10-year Treasury note, which eased from 2.94% to 2.92% yesterday, are now passing hands at 2.90%. Finally, the U.S. equity futures are now suggesting a solidly higher opening when trading resumes at 9:30 AM (EST) and ahead of some remarks by Federal Reserve officials.   - Harvey S. Katz, CFA

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.