Sun May 5, 2013 11:31am EDT
By Chuck Mikolajczak
May 5 (Reuters) - With Friday's U.S. payrollsreport serving as a springboard to lift Wall Street stockindexes to new all-time highs, investors are left to contemplatewhether the gains will fizzle or if the upward momentum willcontinue.
Investors cheered the jobs report on Friday, which showedemployment rose at a faster-than-anticipated pace in April andhiring in the prior two months was much stronger than previouslythought.
The report eased investor concerns after a raft of softdata, particularly in the manufacturing sector, and sent the S&P500 hurtling past what was viewed as its final resistance levelof 1,600 to a fresh all-time closing high of 1,614.42.
With little in the way of economic data on tap this Week andearnings season moving into the home stretch, there appears tobe little that could derail a move higher.
"That's the $64,000 question - without a micro or macrofocus, what do we shift our attention to?" said Art Hogan,managing director of Lazard Capital Markets in New York.
"I would argue in a lack of critical information this markethas found a path of least resistance to the upside."
The economic calendar for the coming Week is extremelylight, with consumer credit and wholesale inventories for Marchamong the few notables.
Earnings season continues its wind down, with Walt Disney Co the only Dow component scheduled to report for the week.Its results could also provide a glimpse into the health ofconsumer spending.
Other notable S&P 500 companies expected to post earningsinclude Tyson Foods Inc, Dean Foods Co,Electronic Arts Inc, Whole Foods Market, NvidiaCorp and Priceline.com.
Corporate earnings have improved from earlier marketexpectations, with the expected earnings growth now at 5.2percent, up from 1.5 percent at the start of earnings season.
According to Thomson Reuters data through Friday, of the 404companies in the benchmark 500 index that have reportedearnings, 68.3 percent have topped analyst expectations, abovethe 63 percent average since 1994 and the 67 percent average forthe past four quarters.
But revenue remains disappointing, with only 46.3 percent ofS&P 500 companies topping Wall Street expectations, well belowthe 62 percent beat rate since 2002 and shy of the 52 percentaverage for the past four quarters.
With the S&P easily breezing past what was seen as its finalresistance point of 1,600, the index is now in uncharted watersfor investors to try and predict when a pullback may occur orgains may slow.
"(The S&P 500) broke through that 1,600-resistance levellike it wasn't even there based on the payrolls report," saidPaul Mendelsohn, chief investment strategist at WindhamFinancial Services in Charlotte, Vermont.
"Generally you don't want to fight a 52-week high, youdefinitely don't want to fight an all-time high."
For the week, the Dow rose 1.8 percent, the S&P 500 gained 2percent, and the Nasdaq advanced 3 percent.
With the gains on Friday, the S&P 500 put together its firstconsecutive weekly advances since a seven-week run that ended inmid-March, a possible sign of continued trends higher. Marketsare heading into the traditionally weaker summer months. Theindex has fallen in May for the past three years.
"The key now is, you want to see the bulls continue to pushhigher, you don't want to see the slip back," said Ryan Detrick,a senior technical strategist at Schaeffer's Investment Researchin Cincinnati, Ohio.
"The ultimate contrarian would say a lot of that very wellcould be priced in, the thing most people aren't expecting is acontinued rally in the normally weak summer months," he said.
By the same token, the lofty levels for equities could makethem ripe for a pullback, with investors resuming the battlebetween booking profits and buying dips. That battle caused theindex to alternate between weekly gains and losses throughoutthe latter portion of March and most of April.
"It is a bipolar market. It is either all on or all off,"Mendelsohn said. "Either things are great and we are going tothe moon, or everything is falling apart and it's all over."
Wall Street Week Ahead runs every Sunday. Questions orcomments on this one can be emailed tocharles.mikolajczak(at)thomsonreuters.com
By Chuck Mikolajczak
May 5 (Reuters) - With Friday's U.S. payrollsreport serving as a springboard to lift Wall Street stockindexes to new all-time highs, investors are left to contemplatewhether the gains will fizzle or if the upward momentum willcontinue.
Investors cheered the jobs report on Friday, which showedemployment rose at a faster-than-anticipated pace in April andhiring in the prior two months was much stronger than previouslythought.
The report eased investor concerns after a raft of softdata, particularly in the manufacturing sector, and sent the S&P500 hurtling past what was viewed as its final resistance levelof 1,600 to a fresh all-time closing high of 1,614.42.
With little in the way of economic data on tap this Week andearnings season moving into the home stretch, there appears tobe little that could derail a move higher.
"That's the $64,000 question - without a micro or macrofocus, what do we shift our attention to?" said Art Hogan,managing director of Lazard Capital Markets in New York.
"I would argue in a lack of critical information this markethas found a path of least resistance to the upside."
The economic calendar for the coming Week is extremelylight, with consumer credit and wholesale inventories for Marchamong the few notables.
Earnings season continues its wind down, with Walt Disney Co the only Dow component scheduled to report for the week.Its results could also provide a glimpse into the health ofconsumer spending.
Other notable S&P 500 companies expected to post earningsinclude Tyson Foods Inc, Dean Foods Co,Electronic Arts Inc, Whole Foods Market, NvidiaCorp and Priceline.com.
Corporate earnings have improved from earlier marketexpectations, with the expected earnings growth now at 5.2percent, up from 1.5 percent at the start of earnings season.
According to Thomson Reuters data through Friday, of the 404companies in the benchmark 500 index that have reportedearnings, 68.3 percent have topped analyst expectations, abovethe 63 percent average since 1994 and the 67 percent average forthe past four quarters.
But revenue remains disappointing, with only 46.3 percent ofS&P 500 companies topping Wall Street expectations, well belowthe 62 percent beat rate since 2002 and shy of the 52 percentaverage for the past four quarters.
With the S&P easily breezing past what was seen as its finalresistance point of 1,600, the index is now in uncharted watersfor investors to try and predict when a pullback may occur orgains may slow.
"(The S&P 500) broke through that 1,600-resistance levellike it wasn't even there based on the payrolls report," saidPaul Mendelsohn, chief investment strategist at WindhamFinancial Services in Charlotte, Vermont.
"Generally you don't want to fight a 52-week high, youdefinitely don't want to fight an all-time high."
For the week, the Dow rose 1.8 percent, the S&P 500 gained 2percent, and the Nasdaq advanced 3 percent.
With the gains on Friday, the S&P 500 put together its firstconsecutive weekly advances since a seven-week run that ended inmid-March, a possible sign of continued trends higher. Marketsare heading into the traditionally weaker summer months. Theindex has fallen in May for the past three years.
"The key now is, you want to see the bulls continue to pushhigher, you don't want to see the slip back," said Ryan Detrick,a senior technical strategist at Schaeffer's Investment Researchin Cincinnati, Ohio.
"The ultimate contrarian would say a lot of that very wellcould be priced in, the thing most people aren't expecting is acontinued rally in the normally weak summer months," he said.
By the same token, the lofty levels for equities could makethem ripe for a pullback, with investors resuming the battlebetween booking profits and buying dips. That battle caused theindex to alternate between weekly gains and losses throughoutthe latter portion of March and most of April.
"It is a bipolar market. It is either all on or all off,"Mendelsohn said. "Either things are great and we are going tothe moon, or everything is falling apart and it's all over."
Wall Street Week Ahead runs every Sunday. Questions orcomments on this one can be emailed tocharles.mikolajczak(at)thomsonreuters.com