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Investors continued to welcome strong earnings and ignore spiking oil prices as markets kept on the upward track. This wrapped up a solid week of gains for the market after strong earnings reports from Microsoft, Procter & Gamble, Caterpillar and others reassured investors about the strength of the earnings period.

The Dow Jones industrial average closed up 97.74 points or nearly 0.9% to 10,907.21, the broader Standard & Poor’s 500 index closed up 9.89 points to 1,283.72, and the Nasdaq composite index gained 21.23 points or 0.9% to 2,304.23. For the week, the Dow gained 2.25%, the S&P gained 1.8% and the Nasdaq rose by 2.5%.

Market breadth was positive and volume was robust. On the New York Stock Exchange, winners beat losers 2 to 1 on volume of 1.93 billion shares. On the Nasdaq, advancers beat decliners by more than 17 to 12 on volume of 2.37 billion shares. The stock market was up four days out of five this week as it recovered from last Friday’s rout, which saw the Dow tumble more than 200 points.

It is reported that the GDP grew at an annual rate of 1.1% percent in the fourth quarter, the slowest pace of growth in three years. This seemingly negative report, is a strong indicator that the slower economic growth will mean the Fed can end its rate-hiking campaign sooner rather than later. The track for the market next week is pretty much dependent on what the Federal Reserve says at its interest-rate policy meeting on Tuesday. Overall, it is felt that the advance can continue as a lot of enthusiasm has returned to the market.

The movers today included Microsoft, Procter & Gamble and Pfizer. Shares of Microsoft shot up 4.9% to $27.79 on a strong fiscal second-quarter performance. The company reported that its quarterly profit rose almost 6% as revenue climbed more than 9%. Stock of Procter & Gamble shot up $0.98 to $59.80, on reporting quarterly earnings that topped analysts’ estimates. Pfizer shot up $0.97 or 4% to $26.02, after the FDA said that it approved its inhaled treatment for diabetes.

Shares of Wal-Mart Stores Inc. fell 48 cents to $45.84 after J.P. Morgan downgraded the retail giant to neutral from overweight. Additionally, it also stated its preference of Target Corp., which it upgraded to overweight from neutral. Target shares were up 27 cents at $54.17.

The world’s largest steelmaker Mittal Steel has launched an unsolicited $22.7 billion bid for Luxembourg’s Arcelor. This made stock of MT surge upwards to $34.26. The merger of the two companies would produce a giant with annual revenue of $70 billion.

Crude futures rose after the U.S. said it is prepared to increase pressure on Iran over its nuclear program, sparking concern in the energy pits over possible disruptions to the oil-rich country’s exports. The Hamas win in the Palestinian elections also unsettled investors as it raised the possibility of further instability in the Middle East. The benchmark March contract ended up $1.50 at $67.76 a barrel. On the week, crude fell 1.1%.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter