Saturday, March 11, 2006

Weekly Recap's Weekly Wrap:

Your dedicated author of this column thought seriously of cutting and pasting portions of the past three weeks to create this week's Weekly Wrap. The S&P closed in the 1280s for the fourth week in a row. There were very few major news events.

That week ended February 17 was the week in which Fed Chairman Bernanke testified before Congress. The market showed confidence in Bernanke with a rally that left the S&P at 1287.24 by the end of the week.

The following week, which ended February 24, the S&P closed at 1289.43. The week ended March 3 it closed at 1287.23. This week it closed at 1281.58. The market is in a holding pattern.
There wasn't much news to drive the markets. There were no earnings reports of broad impact all week. The most noteworthy earnings news was that a number of companies reaffirmed guidance for this quarter or the year. United Technologies, Monsanto, Northrop Grumman, Texas Instruments, and Kohl’s all fit into that category. Restating prior guidance obviously didn't create waves.

There were no major economic releases until the employment report on Friday, which turned out to be about as expected. February payrolls were up 243,000, but there was a downward revision of 18,000 to prior months. The net increase of 225,000 was only a bit above the expected 210,000 gain. Hourly earnings came in right on expectations at 0.3%. The market rallied on Friday, perhaps helped by the bullish bias in that data, but it did nothing to alter economic views.

Oil made headlines when the price briefly fell below $60 a barrel after OPEC said it would leave production unchanged. It closed the week at $62. That was down $1 from last week, but still well within the range of recent weeks.

The 10-year note yield was one factor which actually made a move. It rose to 4.76% from 4.68% last week and 4.57% the week before that. Any further rise in bond yields would be a negative for stocks.

Prospects for the stock market remain mixed, with the outlook for interest rates restraining the upside potential.

long KSS


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