S&P 500 index poised to extend streak
After the steepest two-week rally in more than two years, the S&P 500 is at the top end of its range for the past two months.The benchmark closed Friday above 1,220 for the first time since early August, and bets against the recent rally could start to pile up.But Monday earnings and guidance from IBM (IBM.N), followed by results from Apple (AAPL.O), Coca-Cola (KO.N) and Intel (INTC.O) on Tuesday could give shorts a reason to put their guns down. The S&P could be on its way to a third straight winning week —a streak not seen since February.”There are some fundamental catalysts which could play right into the momentum,” said Richard Ross, global technical strategist for Auerbach Grayson in New York.He said the S&P 500 “has potential to take out that well defined resistance (at 1,220) and it would be a fast move up to the next level, between 1,265 and 1,275.”The sharp turnaround in stocks from a 2011 low hit Tuesday took many by surprise, and buying has spurred more buying as traders and money managers try to catch up with the benchmark’s performance.The pattern repeated itself Friday, with the three major indexes closing at or near session highs.For the week, the Dow Jones industrial average .DJI gained 4.9 percent, the S&P 500 .SPX added 6 percent, and the Nasdaq Composite .IXIC rose 7.6 percent.Ten of the 30 Dow components, including Microsoft (MSFT.O), American Express (AXP.N) and Johnson & Johnson (JNJ.N), are scheduled to report quarterly results next week.Big financial names expected to report include Citigroup (C.N), Goldman Sachs (GS.N) and Wells Fargo (WFC.N), which follow Thursday’s earnings disappointment from JPMorgan Chase & Co (JPM.N) that battered the sector.Reported and estimated earnings growth for the current earnings season is seen at 12.4 percent for all S&P 500 companies, according to Thomson Reuters data. That is down from this year’s estimate peak of 17 percent in July.But companies like Apple and IBM, which hit lifetime closing highs on Friday, are expected to trounce expectations. And positive surprises could play into the buying momentum.”Price will start to discount even more optimism,” said Wasif Latif, vice president of equity investments at the San Antonio, Texas-based USAA Investment Management, which manages about $45 billion in mutual funds.”Growth companies, given the high expectations, need to have a ‘wow’ factor when it comes to reporting and beating earnings,” he said, adding it was certainly possible for these two names to rise further.The VIX volatility gauge .VIX has declined in the past weeks, closing on Friday at its lowest level since August 3. That could translate into less uncertainty and more of the buying frenzy that drove the S&P 500 to its largest two-week percentage advance since mid 2009.ECONOMY: LESS BAD THAN FEAREDSoftening economic numbers in the United States and abroad, as well as a grinding expansion of the euro zone sovereign debt crisis, stymied investors and drove stocks and commodity prices to heavy losses in the third quarter.But despite Greece’s slow crawl toward a default and rising borrowing costs in Spain and Italy, the perception of efficient action in Europe gave investors the confidence to return to equities —or at least cover their short bets.Economic numbers, expected at a certain point in the summer to show the U.S. economy was sliding back into recession, have generally come in above those lowered estimates.USAA’s Latif said that even if current levels are subdued and expectations are lowered “it’s definitely very encouraging” to have data land better than expected.Among the main economic indicators due next week are industrial production and capacity utilization on Monday; producer and consumer inflation on Tuesday and Wednesday, respectively; and weekly jobless claims on Thursday. The week closes with the final reading of the Michigan consumer sentiment index.
S&P 500 index poised to extend streak
After the steepest two-week rally in more than two years, the S&P 500 is at the top end of its range for the past two months.The benchmark closed Friday above 1,220 for the first time since early August, and bets against the recent rally could start to pile up.But Monday earnings and guidance from IBM (IBM.N), followed by results from Apple (AAPL.O), Coca-Cola (KO.N) and Intel (INTC.O) on Tuesday could give shorts a reason to put their guns down. The S&P could be on its way to a third straight winning week —a streak not seen since February.”There are some fundamental catalysts which could play right into the momentum,” said Richard Ross, global technical strategist for Auerbach Grayson in New York.He said the S&P 500 “has potential to take out that well defined resistance (at 1,220) and it would be a fast move up to the next level, between 1,265 and 1,275.”The sharp turnaround in stocks from a 2011 low hit Tuesday took many by surprise, and buying has spurred more buying as traders and money managers try to catch up with the benchmark’s performance.The pattern repeated itself Friday, with the three major indexes closing at or near session highs.For the week, the Dow Jones industrial average .DJI gained 4.9 percent, the S&P 500 .SPX added 6 percent, and the Nasdaq Composite .IXIC rose 7.6 percent.Ten of the 30 Dow components, including Microsoft (MSFT.O), American Express (AXP.N) and Johnson & Johnson (JNJ.N), are scheduled to report quarterly results next week.Big financial names expected to report include Citigroup (C.N), Goldman Sachs (GS.N) and Wells Fargo (WFC.N), which follow Thursday’s earnings disappointment from JPMorgan Chase & Co (JPM.N) that battered the sector.Reported and estimated earnings growth for the current earnings season is seen at 12.4 percent for all S&P 500 companies, according to Thomson Reuters data. That is down from this year’s estimate peak of 17 percent in July.But companies like Apple and IBM, which hit lifetime closing highs on Friday, are expected to trounce expectations. And positive surprises could play into the buying momentum.”Price will start to discount even more optimism,” said Wasif Latif, vice president of equity investments at the San Antonio, Texas-based USAA Investment Management, which manages about $45 billion in mutual funds.”Growth companies, given the high expectations, need to have a ‘wow’ factor when it comes to reporting and beating earnings,” he said, adding it was certainly possible for these two names to rise further.The VIX volatility gauge .VIX has declined in the past weeks, closing on Friday at its lowest level since August 3. That could translate into less uncertainty and more of the buying frenzy that drove the S&P 500 to its largest two-week percentage advance since mid 2009.ECONOMY: LESS BAD THAN FEAREDSoftening economic numbers in the United States and abroad, as well as a grinding expansion of the euro zone sovereign debt crisis, stymied investors and drove stocks and commodity prices to heavy losses in the third quarter.But despite Greece’s slow crawl toward a default and rising borrowing costs in Spain and Italy, the perception of efficient action in Europe gave investors the confidence to return to equities —or at least cover their short bets.Economic numbers, expected at a certain point in the summer to show the U.S. economy was sliding back into recession, have generally come in above those lowered estimates.USAA’s Latif said that even if current levels are subdued and expectations are lowered “it’s definitely very encouraging” to have data land better than expected.Among the main economic indicators due next week are industrial production and capacity utilization on Monday; producer and consumer inflation on Tuesday and Wednesday, respectively; and weekly jobless claims on Thursday. The week closes with the final reading of the Michigan consumer sentiment index.
S&P 500 index poised to extend streak
After the steepest two-week rally in more than two years, the S&P 500 is at the top end of its range for the past two months.The benchmark closed Friday above 1,220 for the first time since early August, and bets against the recent rally could start to pile up.But Monday earnings and guidance from IBM (IBM.N), followed by results from Apple (AAPL.O), Coca-Cola (KO.N) and Intel (INTC.O) on Tuesday could give shorts a reason to put their guns down. The S&P could be on its way to a third straight winning week —a streak not seen since February.”There are some fundamental catalysts which could play right into the momentum,” said Richard Ross, global technical strategist for Auerbach Grayson in New York.He said the S&P 500 “has potential to take out that well defined resistance (at 1,220) and it would be a fast move up to the next level, between 1,265 and 1,275.”The sharp turnaround in stocks from a 2011 low hit Tuesday took many by surprise, and buying has spurred more buying as traders and money managers try to catch up with the benchmark’s performance.The pattern repeated itself Friday, with the three major indexes closing at or near session highs.For the week, the Dow Jones industrial average .DJI gained 4.9 percent, the S&P 500 .SPX added 6 percent, and the Nasdaq Composite .IXIC rose 7.6 percent.Ten of the 30 Dow components, including Microsoft (MSFT.O), American Express (AXP.N) and Johnson & Johnson (JNJ.N), are scheduled to report quarterly results next week.Big financial names expected to report include Citigroup (C.N), Goldman Sachs (GS.N) and Wells Fargo (WFC.N), which follow Thursday’s earnings disappointment from JPMorgan Chase & Co (JPM.N) that battered the sector.Reported and estimated earnings growth for the current earnings season is seen at 12.4 percent for all S&P 500 companies, according to Thomson Reuters data. That is down from this year’s estimate peak of 17 percent in July.But companies like Apple and IBM, which hit lifetime closing highs on Friday, are expected to trounce expectations. And positive surprises could play into the buying momentum.”Price will start to discount even more optimism,” said Wasif Latif, vice president of equity investments at the San Antonio, Texas-based USAA Investment Management, which manages about $45 billion in mutual funds.”Growth companies, given the high expectations, need to have a ‘wow’ factor when it comes to reporting and beating earnings,” he said, adding it was certainly possible for these two names to rise further.The VIX volatility gauge .VIX has declined in the past weeks, closing on Friday at its lowest level since August 3. That could translate into less uncertainty and more of the buying frenzy that drove the S&P 500 to its largest two-week percentage advance since mid 2009.ECONOMY: LESS BAD THAN FEAREDSoftening economic numbers in the United States and abroad, as well as a grinding expansion of the euro zone sovereign debt crisis, stymied investors and drove stocks and commodity prices to heavy losses in the third quarter.But despite Greece’s slow crawl toward a default and rising borrowing costs in Spain and Italy, the perception of efficient action in Europe gave investors the confidence to return to equities —or at least cover their short bets.Economic numbers, expected at a certain point in the summer to show the U.S. economy was sliding back into recession, have generally come in above those lowered estimates.USAA’s Latif said that even if current levels are subdued and expectations are lowered “it’s definitely very encouraging” to have data land better than expected.Among the main economic indicators due next week are industrial production and capacity utilization on Monday; producer and consumer inflation on Tuesday and Wednesday, respectively; and weekly jobless claims on Thursday. The week closes with the final reading of the Michigan consumer sentiment index.
No quick food aid seen for crisis-hit North Korea
China, the only ally of the secretive Stalinist state, has also been non-committal on how much food it is providing.Aid agencies have said food shortages are worsening in the isolated state and a third of children under 5 are malnourished.A Reuters report published last week detailed worsening conditions in the North Korean province of South Hwanghae, the country’s main rice-producing region.”China has always done as much as it can to provide help to neighbor North Korea,” Chinese Foreign Ministry spokesman Liu Weimin said on Monday, without giving details.While the United States insists its decision to withhold aid is not politically motivated, South Korea said on Monday North Korea must take measures to improve relations that nose-dived last year after two attacks killed 50 South Koreans.The United States has backed South Korea’s stance, and experts say it is unlikely to restart aid — suspended in 2008 — without its ally’s support.A source at the South’s Unification Ministry, which deals with inter-Korean affairs, said aid depended on various factors, such as transparency and distribution, the food situation in the North and better relations.”At the current moment we don’t have any plans to give massive food aid to North Korea, and neither has there been any demand from North Korea,” said the ministry source, who declined to be identified.South Korea’s Unification Minister Yu Woo-ik told parliament last week he did not think the food situation in the North was “very serious.”The North’s appeals for food aid have gone largely unanswered by the international community, and only 30 percent of a U.N. food target for the country has been met.The country’s dysfunctional food-distribution system, rising global food prices and sanctions imposed over its nuclear and missile programs have contributed to what appear to be more serious food shortages in the North. Summer floods and typhoons have compounded the problem.Food aid is invariably linked to politics on the peninsula, even if not officially.The South insists that improved relations hinge on an apology from the North for last year’s bombing of a South Korean warship and shelling of one of its islands. The North says it was not responsible for the ship attack and it was provoked into striking the island.Experts say an improvement in Korean ties would also clear the way for a resumption of talks with the North which collapsed two years ago. The talks, which also involve China, Japan and Russia, offer the North aid in return for disabling its nuclear weapons program.”PRESSURE MOUNTING”The United States has deliberated for much of the year on whether to resume food aid to the North, and while acknowledging on Friday that it was deeply concerned, said it was not convinced aid would be delivered to the most needy.Washington had been, along with Seoul, the North’s biggest food aid provider until it suspended its relief program in 2008 amid a dispute over monitoring.Critics accuse the North’s authoritarian leadership of siphoning off aid to feed its million-strong army.Some skeptics believe North Korea could be hoarding food for a celebration in April to mark the 100th anniversary of the birth of “Eternal President” Kim Il-sung. The North could also be stockpiling ahead of a possible underground nuclear test, which would likely provoke another round of sanctions.The United States in August offered North Korea up to $900,000 in emergency assistance to cope with flooding, but U.S. officials said it consisted largely of supplies such as plastic sheeting and tents which carried less risk of being diverted.Victor Cha, a North Korea expert at Georgetown University and a former Bush administration official, said he had been told by a U.S. flood assessment team the situation in the North was worsening and that pressure was mounting for Washington to act.John Delury, of Yonsei University in Seoul, said that on recent visit to Pyongyang he had been told by people familiar with the situation that North Koreans were annoyed with U.S. dithering and wanted a straight answer on aid.He was told North Korea had lost a quarter of its grain production from flooding in South Hwanghae.Daniel Pinkston of the International Crisis Group think tank said Seoul and Washington found themselves in a moral conundrum, having to decide between an act seen as helping to prop-up an authoritarian leadership, or trying to help hungry civilians.Both governments were focused on winning elections next year, and there was little political will to provide aid and assistance to North Korea, he said.
