The U.S. stock market shook off international bears, posting positive numbers heading into the final stretch, but worrisome geopolitical events have escalated. Will equities continue to shrug off global events or is this another warning of turbulent days ahead?
The stock market had a strong run on Thursday, with all three major indices hitting green in spite of rising natural gas costs and poor economic data from Asia. However, it’s a tale of three cities, with the S&P 500 year-to-date closing slightly above parity, while the NASDAQ composite index is nearly 3% above its January opening. But the laggard continues to be the Dow Jones, which is still running negative for the year, down 1.7%.
Domestically, strong economic data helped offset bearishness in global sectors. According to a private survey by Markit, manufacturing in the U.S. grew at the fastest rate in almost four years in February. That soothed investor nerves after equivalent surveys in China and Europe disappointed, with Chinese manufacturing falling to a seven-month low, while Europe’s showed a steady but slow pace of growth. However, the biggest risk to investors is rising geopolitical tensions, particularly in Ukraine, with the European Union imposing sanctions on Ukrainian officials and the White House expressing outrage over reports that automatic weapons were used against protestors. As a consequence, the heavily traded Market Vectors Russia ETF is down nearly 9% year-to-date.
Currencies – No currencies this week
Winners & Losers
The winner for this week is Zale Corporation, ticker symbol ZLC :
- Shares of the jewelry company soared during pre-market trading when a buyout by rival Signet was announced. The cash purchase amount will be roughly $690 million, which helped send shares to close at nearly 21 dollars, a 40% jump from earlier in the week.
- The consolidation makes business sense across the board, as Zale’s recently posted profits for the full year after closing underperforming stores, while the combined partnership with Signet provides retail exposure to both Canada and the U.K.
The loser for this week is Goodrich Petroleum, ticker symbol GDP :
- Shares took a heavy loss on Thursday, down nearly 20% after earnings result significantly trailed Wall Street expectations.
- The bearishness was further exacerbated when research firm Macquarie downgraded the company to “Underperform,” citing weak production results in the fourth quarter and liquidity concerns heading into the end of 2013.
Gold prices took a slight rest during Thursday’s market action, settling at $1,310 dollars per troy ounce. However, in the greater context, this was nothing more than a mere inconvenience as the yellow metal is up over 4% since the beginning of the month. Continued unrest in the geopolitical sphere could send prices higher over the coming weeks.
Silver had a sharp decline, down almost 2% Thursday and giving up all of its gains from the prior session. However, it too has benefited strongly from a resurgence in the commodities sector, up 11-and-a-half percent for the month.
Palladium also absorbed some losses for the day, down nearly half-a-percent against the prior. For the month, palladium is up nearly 4-and-a-half percent, but is no longer the top performing precious metal for the year, with that distinction belonging to silver, up 7.6%.