Market Roundup: Positive Returns Despite Continued Worries about Oil Production

Economy/Stock Market

The week began with both the S&P 500 and the Dow increasing for a fifth session in a row, marking their longest winning streaks since October. A rebound in commodities prices helped stoke the recent rally. Oil prices have risen steadily since Russia, Saudi Arabia, Venezuela and Qatar agreed last month to freeze their output at January levels. Additionally, Friday’s strong U.S. jobs report calmed concerns, helping interest rates edge higher. The next day, the five-day winning streak was snapped as supply woes weighed on oil prices and worries about a prolonged slowdown in China resurfaced. Crude-oil tumbled, leading the market to resume its doubts over the potential for an output freeze. Gains in utilities and consumer-staples stocks imply that investors remain cautious in the wake of the recent rally. Stocks ticked higher Wednesday, led by a rise in energy shares after government data showed inventories of gasoline and other fuels fell, reflecting strong demand. In a pleasant surprise, wholesale inventories rose 0.3% in January, the first increase after three months of declines. Analysts expect Fed officials will likely to keep short-term interest rates unchanged at their March meeting, but leave open the possibility of rate rises in April and June. The European Central Bank cut interest rates in the Eurozone to zero, expanding its money printing program as it seeks to revive the region’s economy and fend off deflation. Indices closed the week well into the green zone on Friday. Energy stocks traded up on a jump in crude oil.

Market Roundup: Major Indices Posted Gains for the Week

Economy/Stock Market

Monday brought February to a close with the S&P fell 0.41% in February after losing 5.07% in January, putting its year-to-date loss at 5.47%. Worries about China’s economy, depressed oil prices and signs of deflation in the Eurozone all weighed on the market. Tuesday, the stock indexes surged to their highest levels in nearly two months on signs of improvement in the U.S. economy. The Institute for Supply Management’s manufacturing index rose more than anticipated, rising from 48.2 in January to 49.5 in February. Though the index remained below the neutral threshold of 50, there was improvement in the production and inventory index. Higher oil prices fueled a rally mid-week, as energy shares led the S&P 500 up. Data showing continued strength in the labor market attracted attention as investors search for clues about when the Fed will make its next interest-rate increase.  On Thursday, the Non-Manufacturing Index from the Institute for Supply Management indicates growth in February at 53.4%. The index for January was 53.5%, thus reflecting growth, but at a slower rate. The news from the employment sector continues to be favorable based on the latest report from the Bureau of Labor Statistics. Total nonfarm payroll employment increased by 242,000 in February, while the unemployment rate was unchanged at 4.9%.