NEW YORK — As stocks climbed toward their first two-week stretch of gains in nearly 11 months, equity analysts said the recent run higher bodes well for the remainder of March, though the dicey economic climate still weighs heavily on the market.
“The latest relief rally was sparked by lots of good news for a refreshing change, which I believe may have some staying power,” said Ed Yardeni, president and chief investment strategist at Yardeni Research Inc.
Up 0.7 percent for the week, the Dow Jones industrial average on Friday fell 122.42 points, or 1.7 percent, to 7,278.38, leaving the blue-chip index up 0.8 percent for the week, and giving its first consecutive weekly gains since the period ending May 2, 2008, when it rose three weeks straight.
“The fundamentals are challenging. . . . The market was vastly oversold a few weeks ago, so we weren’t surprised by a relief rally — our sense is use rallies as a way of implementing short positions at higher prices,” said Dean Curnutt, president of Macro Risk Advisors.
Utilities, consumer staples and health care led sector gains Friday, while financials, energy and industrial shares fronted the losses on the S&P 500 index, which fell 15.5 points, or 2 percent, to land at 768.54, up 1.5 percent from the week-ago close. The technology-laden Nasdaq Composite shed 26.21 points, or 1.8 percent, to 1,457.27, leaving it up 1.8 percent.
“We believe the current rally has some limited room to run into the end of the quarter, as money managers who have been underweight equities look to lock in their outperformance,” said Nicolas Colas, chief market strategist at BNY ConvergEx.
A portion of last week’s gains came Wednesday, when stocks restarted the prior session’s rally after the Federal Reserve’s surprising announcement that it would buy $300 billion in longer-term Treasurys to help the ailing economy.
“We think the Fed has put a floor under financial system confidence and therefore stock prices. If a trillion dollars of stimulus cannot buy the economy some meaningful relief, we have much, much bigger problems. If that is the case, we will know in the second quarter,” said Colas.
Less optimistic on a continued run higher in the immediate future, Nick Kalvas, equity analyst at MF Global Research, said the market tends to trade lower post March expiration. Plus, “credit remains a negative despite the Fed’s action,” Kalvas said.
Uncertainty centers on the longer-term health of the economy and the outlook for corporate earnings, said Robert Pavlik, chief market strategist at Banyan Partners LLC.
This week brings earnings from upscale jeweler Tiffany & Co. and drugstore chain Walgreen Co. on Monday, followed by Commercial Metals Co., Carnival Corp. and Jabil Circuit Inc. on Tuesday.
