The recovery is moving forward despite the lack of job growth. Importantly, consumer spending is picking up even though consumer sentiment is very weak. Apparently, the difference in spending and sentiment is whether you have a job or not. And those with jobs appear to be less nervous based on recent retail sales numbers. Meanwhile, the jobless remain quite discouraged.
Equities netted moderate gains this past week but largely on light volume. A variety of factors boosted stocks as the week was light with economic indicators. Stocks got some lift Tuesday with Boeing shares advancing after Northrop Grumman withdrew as a bidder for a U.S. Air Force air-tanker contract. Wednesday, favorable comments from analysts boosted bank stocks. Also, the Commerce Department said wholesale inventories slipped in January, implying that consumer demand is strengthening. On Thursday, stocks showed significant gains despite initial jobless claims remaining elevated as Citigroup CEO Vikram Pandit stated he expected the bank to post significant profits in coming quarters. Also, a parliamentary move in the Senate made it harder to enact health care reform, boosting health care stocks. Equities ended the week mixed despite strong retail sales numbers for February from the Commerce Department. Offsetting news was a dip in consumer sentiment for March.
Equities were up this past week. The Dow was up 0.6 percent; the S&P 500, up 1.0 percent; the Nasdaq, up 1.8 percent; and the Russell 2000, up 1.6 percent.
For the year-to-date, major indexes are up as follows: the Dow, up 1.9 percent; the S&P 500, up 3.1 percent; the Nasdaq, up 4.3 percent; and the Russell 2000, up 8.2 percent.
This past week was a milestone for many indexes as the latest bear market hit bottom for the Dow and other indexes a year ago on March 9, 2009. The following table shows how key indexes have fared since that bottom as well as since historical peaks.
The bottom line
The economy handed out mixed news this past week. The advance in retail sales was quite a positive while the improvement in the trade gap likely was just noise in the data (with both exports and imports coming off big increases the month before). But the weak consumer sentiment number acted as a reminder that there now may be developing a two-track economy—those with jobs and those without.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.