Market Direction: sign-up and subscribe alert issued ?/?/?
After registering three consecutive weekly gains, the stock market endured a
volatile trading week, but was able to log its fourth weekly gain in a row once
it was all said and done. The S&P 500 added 1.1% for the week, extending
its four-week run to 8.4%.
The benchmark index spent the bulk of the week near its 100-day moving average (1998.9) after running up to that level last Friday. A strong rally into the weekend lifted the S&P 500 from its 100-day average into the neighborhood of the 200-day moving average (2019.9). Investors did not receive any market-moving data during the week, which put a bright spotlight on Thursday's policy meeting at the European Central Bank.
Going into Thursday, the market had high hopes for new stimulus from the central bank and the ECB delivered, expanding its quantitative easing by EUR20 billion to EUR80 billion/month and lowering the interest rate corridor. Furthermore, the ECB announced it will now include corporate bonds in its asset purchase program and add four new targeted longer-term refinancing operations with four-year maturities.
In sum, the actions undertaken by the ECB represented everything the market had hoped for, but the decidedly bullish response to the policy statement reversed in a flash once ECB President Mario Draghi hinted that the market should not be girding its loins for more easing. For instance, the euro was down more than 1.5% against the dollar immediately after the policy statement was released, but surged nearly 2.0% against the greenback by day's end. For its part, Germany's DAX whipped around a 5.0%+ range on Thursday, ending the day lower by 2.3%. The German index surged 3.2% on Friday, ending the week little changed.
The economy
The benchmark index spent the bulk of the week near its 100-day moving average (1998.9) after running up to that level last Friday. A strong rally into the weekend lifted the S&P 500 from its 100-day average into the neighborhood of the 200-day moving average (2019.9). Investors did not receive any market-moving data during the week, which put a bright spotlight on Thursday's policy meeting at the European Central Bank.
Going into Thursday, the market had high hopes for new stimulus from the central bank and the ECB delivered, expanding its quantitative easing by EUR20 billion to EUR80 billion/month and lowering the interest rate corridor. Furthermore, the ECB announced it will now include corporate bonds in its asset purchase program and add four new targeted longer-term refinancing operations with four-year maturities.
In sum, the actions undertaken by the ECB represented everything the market had hoped for, but the decidedly bullish response to the policy statement reversed in a flash once ECB President Mario Draghi hinted that the market should not be girding its loins for more easing. For instance, the euro was down more than 1.5% against the dollar immediately after the policy statement was released, but surged nearly 2.0% against the greenback by day's end. For its part, Germany's DAX whipped around a 5.0%+ range on Thursday, ending the day lower by 2.3%. The German index surged 3.2% on Friday, ending the week little changed.
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By the numbers the weekly closing index numbers compared
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