February 22nd, 2012 12:17 PM by Mel Samick
Stocks closed mixed in thin trading last Friday ahead of the three-day holiday weekend, but all major averages logged robust gains for the week following some positive economic news and amid optimism that Greece would soon find a solution to its debt crisis. The Dow finished just shy of the psychologically important 13,000 level closing the week at 12,949, up 1.2 percent for the week. The S&P and NASDAQ logged their sixth positive week in seven. The NASDAQ closed at 2,951, up 1.7 percent for the week while the S&P finished at 1,361 up 1.4 percent for the week. Typically, the stock market pauses towards the end of earnings season as the market digests the results. According to Thomson Reuters data, 404 of the S&P 500 companies have reported results, with 64 percent beating expectations.
Fears of a sharp slowdown in the U.S. economy have faded in recent weeks amidst signs that the job market is picking up and that manufacturing is accelerating. New claims for unemployment benefits unexpectedly fell last week to a near four-year low, a government report showed on Thursday, suggesting the labor market was finally strengthening. New jobless claims have declined for three straight weeks. Last week's drop pushed claims below the 350,000 level, the lowest level since March 2008, which economists normally associate with sustained strength in the labor market. Job gains have exceeded 200,000 for two straight months and the unemployment rate dropped to a three-year low of 8.3 percent in January. Equity markets have tended to react positively on progress in helping Athens avoid chaos.
Optimism in Europe grew last week after German officials gave up plans to pressure Greece by withholding part of the bailout. The countries that use the euro pulled Greece back from an imminent and potentially catastrophic default on Tuesday, when they finally stitched together a 130 billion euro ($170 billion) rescue they hope will also provide a lifeline to their common currency. The finance ministers from Greece and the other 16 countries that use the euro wrangled until the early morning hours over the details of the rescue, squeezing last-minute concessions out of private holders of Greek debt. Greece has been in debt reduction discussions that could have seen private creditors take losses of around 70 percent on their Greek bonds. The eurozone and the International Monetary Fund, which will be providing the money for the new bailout hope the new program will eventually put Greece back into a position where it can survive without external support and secure its place in the euro currency union. Including Greece's first bailout worth 110 billion euro ($146 billion), the new deal means every Greek man, woman and child will owe the eurozone and the IMF about 22,000 euro ($29,000). Despite the promise of new rescue loans, the other 16 euro countries made it very clear that their trust in Greece is running low. Before Athens will see any new funds, it has to implement a range of promised cuts and reforms.
Information provided by NYCB Capital Markets