Wall Street polished off its best week in two years with a strong performance Friday, shrugging off the spectre of a slow economy, high oil prices and the Greek crisis.
Eight bearish weeks were put to end with a stellar five-day performance.
The Dow Jones Industrial Average jumped 5.4 per cent in the week, ending at 12,582.77, in the index's best weekly show since July 2009.
The broader S&P 500 did better, rising 5.6 per cent to 1,339.67. And the tech-heavy Nasdaq outdid them both, picking up 6.2 per cent to 2,816.03.
The markets brushed off middling a negative US economic data all week.
On Friday a hesitantly positive show on the ISM manufacturing index for June was grasped as a big positive, while reports on falling consumer sentiment report and slowing activity in the construction sector were ignored.
'We got some good news finally after a couple of months of persistently negative news,' said Gina Martin of Wells Fargo Securities.
'We finally got a little reprieve from the negative news out of Greece, and then you couple that with some nice data releases over the last couple of days.'
Two months of declining share values had overshot fundamentals, according to Hugh Johnson of Hugh Johnson Advisors.
'Optimism was very low and the market was undervalued — you had the conditions for a spirited rally,' he said.
The rally was broad-based, reaching across nearly all sectors of the markets.
But it still was not enough to recover all the ground lost through most of the second quarter—the Dow had given up 7 per cent in the eight week bear market.
The S&P was still lower than the 1,363.31 year's peak of April 29.
And the Nasdaq was well lower than its April 29 acme of 2,873.54.
Martin said the data on the economy and doubts about the strength of Greece's bailout deal would still guide trade.
'There is still a lot of negative sentiment out there regarding the sustainability of the European debt issue,' she said.
'It's pretty clear that we need a contribution of the consumer, and the consumer spending depends in large part of unemployment condition,' she added.
'We will have to see a steady improvement in unemployment coming back into the second half of the year to sustain any market advance.'
Next week's trade will be shortened by the July 4 holiday, and trading could be light.
Traders will be focused, foremost, on the job creation numbers and unemployment rate for June, to be released on Friday, July 8.
Before that there will be the data on how the service sector did in June, in the ISM non-manufacturing index, on Wednesday.
'The ISM manufacturing survey ... was better than expected, so the companion report on the services sector will be watched to see if it suggests that the economy is pulling out of its soft patch. We expect a mediocre report,' said economists at IHS Global Insight on Friday.
IHS said the jobs report 'is expected to be lacklustre but not as weak as in May.'
'It will be a very good indication of whether this is a soft patch which is transitory or not,' said Johnson.
Also looming is the potential debacle if the White House and Republican lawmakers cannot break their deadlock over raising the country's $14.29 trillion debt ceiling before August 2.
If they cannot forge a deal — which would be a package of longer-term policies to reign in the fiscal deficit — the real threat of a US sovereign debt default looms for that date.
The International Monetary Fund warned this week that that could wreak havoc with the US domestic economy and the global financial system.
Source : New Age
