Saturday, February 05, 2005

Market Week in Review

S&P 500 1,203.03+2.70%

Click here for the Weekly Wrap by

BOTTOM LINE: The technical condition of the broad market improved markedly this week as the advance/decline line strengthened and volume improved. Moreover, almost every sector rose for the week. The major US indices, with the exception of the NASDAQ, appear poised to make an assault on last year's highs. Long-term interest rates fell on mixed economic data, diminishing inflation concerns and a stronger US dollar. This also spurred further deterioration in Gold and continuing outperformance by Utility stocks. Greenspan's comments after the Fed rate hike were also viewed as less hawkish, further boosting demand for stocks and bonds. Small-caps significantly outperformed for the week and have now recouped almost all of their early year losses. As well, the homebuilding sector continues to defy the bears as rates remain near historic lows, the health of the US consumer continues to improve and supply remains relatively tight. The gaming sector outperformed on strong earnings reports and merger activity. Finally, declines in energy prices and union agreements led to outperformance by the airline stocks. Measures of investor anxiety were mostly lower on the week.

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