US stocks over the past week were volatile. After the worst sell-off in more than a year on Monday, stocks put in a three-day winning streak snuffed out on Friday after Fitch downgraded Italy and Spain on risks related to the eurozone debt crisis.
The Dow Jones Industrial Average gained 1.74 percent over the week to finish at 11,103.12 points.
The tech-rich NASDAQ added 2.65 percent to 2,479.35, while the S&P 500 advanced 2.12 percent to 1,155.46.
Wall Street investors were encouraged by signs that Europe was taking steps to contain the eurozone sovereign debt crisis as Greece teeters on default.
On Thursday, the European Central Bank announced measures to shore up banks in the 17-nation eurozone that have been weakened by the sovereign debt problems.
“There’s a feeling that European leaders have finally realized the gravity of the situation. Nothing has been resolved. The market has steadied on hopes, which must be changed into action,” Gregori Volokhine at Meeschart Capital Markets said.
“This week we’ve had some numbers that indicate the US economy can escape” a return to recession, Volokhine said.
A series of mostly better-than-expected data throughout the week broke through an accumulation of disappointing numbers, suggesting the US economy, though growing slowly, was not slipping into a double-dip contraction.
Last month’s readings from the Institute of Supply Management showed growth on the manufacturing and services sectors, while construction spending unexpectedly rose in August.
The US Department of Labor’s highly anticipated jobs report on Friday showed a net 103,000 nonfarm jobs were created last month, not enough to lower the unemployment rate at 9.1 percent for a third month.
“The US job market isn’t booming, but it is moving in the right direction. This adds to a string of better-than-expected data that has third-quarter real GDP growth tracking close to 3 percent at an annual rate,” Ryan Sweet at Moody’s Analytics said.
“Coupled with more private-sector hiring, this should lower the odds of another recession,” he added.
Wall Street investors will likely pry their gaze away from Europe’s debt crisis next week to focus on the health of US companies in a faltering economy as quarterly earnings season gets under way.
Aluminum giant Alcoa plays its tradition kick-off role after the markets close on Tuesday, followed notably by financial results from bank JPMorgan Chase and Internet titan Google on Thursday.
“It’s clear that this is a very tenuous recovery. Earnings are looking to reflect that,” Marc Pado at Cantor Fitzgerald said.
However, “it’s a real opportunity for the momentum to swing during this earnings season — you make your numbers, you reaffirm the year, you say that things don’t look as bad as the market is projecting,” he said.
On the economic calendar, investors will have a chance to pore over the minutes of the US Federal Reserve’s last policy-setting meeting, which is scheduled to be published on Tuesday.
The US trade balance report is scheduled on Thursday, followed on Friday by data on retail sales, import prices and consumer confidence.
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