On Friday, the major indices ended the week on an upbeat note with the NASDAQ reaching a 15-year high and the Dow Jones Industrial Average advancing 0.9%. The Dow Jones ended the week higher by 2.1% while the S&P 500 gained 2.7% for the week. The Dow Jones was up 168.62 points to close at 18,127.65. The NASDAQ was up 34.04 points to close at 5,026.42 while the S&P 500 advanced 18.79 points to close at 2,108.06.
Market indices climbed throughout the trading session on Friday with trading volume running well above average due to today's quadruple witching. As a result, more than two billion shares changed hands at the New York Stock Exchange floor.
Friday’s decline in the dollar was a supportive factor for the commodity market. Crude oil settled higher by 2.4% at $46.58/barrel, but didn’t reach its best level of the session after the latest Baker Hughes rig count registered its 15th consecutive weekly decline. Meanwhile, the energy sector finished well ahead of other groups, rising 1.4%.
S&P 500 (March 16th - 20th, 2015)
At the start of the trading week, the stock market rebounded from the previous week's decline with a Monday increase that sent the S&P 500 back above its 50-day moving average, rising 1.3% to close at 2,060.00. The market ended Tuesday on a mixed note ahead of Wednesday's release of the latest policy directive from the Federal Reserve. The NASDAQ added 0.2% while the S&P 500 and Dow Jones Industrial Average lost 0.3% and 0.7%, respectively. indices endured some selling in the early going, but the NASDAQ spent the day ahead of the broader market thanks to relative strength in the technology sector, which was up 0.1%. Specifically, shares of Apple climbed 1.7%, which underpinned the sector and the NASDAQ.
U.S. indices spent the first half of the Wednesday session down, but surged following the latest policy statement from the Federal Open Market Committee (FOMC). The S&P 500 settled higher by 1.2% with all ten sectors ending up. The FOMC statement included the Federal Reserve lowering its 2015 GDP forecast range to 2.3-2.7% from 2.6-3.0% that was expected in December.
Thursday ended on a mixed note. The S&P 500 lost 0.5% after spending the entire trading session in negative territory while the NASDAQ added 0.2%. The tech-heavy NASDAQ extended its week-to-date gain to 2.5% while the S&P 500 extended its weekly advance to 1.7%.
On Friday, the financial services sector was up 1.3% and consumer discretionary increased 1.1%, outperforming expectations with the discretionary sector increasing behind homebuilders that reported better than expected results. The technology sector was up 0.5%, falling during the final minutes of trading as Apple fell to a fresh session low.
On Friday, shares of Nike Inc., the world’s largest sporting-goods maker, increased the most in almost six months after reporting earnings that topped analysts’ estimates, helped by demand in North America.
Nike’s shares increased 3.7% to $101.98 at closing time on Friday, the biggest gain since September 26th. Nike has jumped 29% in the past 12 months.Net income in the quarter ended February 28th rose 16% to $791 million, or 89 cents a share, from $682 million, or 75 cents, a year earlier. The average of 27 analysts’ estimates compiled by Bloomberg was 84 cents.
Total orders rose 11%, excluding the effects of foreign-currency exchange-rate fluctuations. That topped estimates of 9.9%. The measure is closely watched because traders view it as a proxy for future sales. The China division also did well, with revenue rising 15% and orders advanced 22%, topping an estimate for a 13% gain.
Nike is taking advantage of missteps at Adidas AG, the No. 2 supplier of sports gear. After years of losing market share, the Germany-based company is looking for a replacement for Chief Executive Officer Herbert Hainer. Next week, the company is expected to announce a turnaround plan.
Nike (March 16th – 20th, 2015)
Total revenue advanced 7% to $7.5 billion. That missed the $7.6 billion average of analysts’ estimates. Delayed shipments caused by the slowdown at U.S. West Coast ports reduced sales in the period, and it will take a few quarters to get the flow of products back to normal, Nike said.
The strength of the U.S. dollar continued to weigh on Nike’s results overseas, where it generates more than half its revenue. Sales in Western Europe gained 10% last quarter. Without the euro’s weakness against the dollar, they would have advanced 21%.
The strong dollar will hurt sales, gross margin and profit next fiscal year, Don Blair, Nike’s chief financial officer, said on a conference call Thursday. Revenue will gain in the mid-single percentage range. Analysts were projecting growth of 7.5%. Earnings per share will increase a maximum at a low-double digit percentage. Analysts expected a 13% advance.
For the week, Nike’s stock reached a weekly high of $103.72 on Friday after it traded at a weekly low of $95.52 on Tuesday.
Next week, a range of economic and corporate news will have an impact on a range of stocks, indices, currency pairs and commodities. On Monday, March 23rd existing home sales will be released. Analysts suggest this should have a minimal effect on the markets – apart from construction stocks. On Tuesday, March 24th consumer price index (CPI) figures and new home sales data will be announced. If consumer price index figures are on the rise, this means that prices for things go up. However, if CPI is rising quicker than average wages, then the consumer's purchasing power declines. CPI acts as a measure of inflation. So, if CPI is rising, this could be considered a negative for the U.S. economy at this moment in time and could cause a decline in the value of U.S. indices such as the Dow Jones. On Thursday, March 26th weekly U.S. jobless claims data will be released. On Friday, March 27th corporate profits will be released in the U.S. If corporate profits are on the rise, this could cause a rise in the value of some of the largest U.S. stocks, such as ExxonMobil and Apple. Finally, on Friday, Gross Domestic Product (GDP) figures and consumer sentiment data will be released.
U.S. markets were calmed slightly this week, with an indication on Wednesday that the U.S. Federal Reserve may not increase interest rates as soon as was originally thought. However, there is still debate if this same strategy will be followed in other markets such as the U.K. Every week presents new opportunities to spot trends that could have an influence on the value of stocks, indices, currency pairs and commodities from across the globe. As we head into the end of the 1st quarter of 2015, there’s bound to be more changes that will impact these assets.
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