US stock markets shrug off bad news, continue to float higher

Analysts attribute mkt’s resilience to Fed’s economic policy

NEW YORK, April 13, (AFP): There has been plenty of recent ammunition to feed skepticism in the bull market of 2013. Yet stocks continued to float higher, racking up solid gains for the week.

Markets dipped on Friday after the release of weak retail sales data and middling earnings reports from banking giants JPMorgan Chase and Wells Fargo. But it wasn’t enough to dent the overall gains for the week, which were considerable.

The Dow Jones Industrial Average closed the week at 14,865.06, up 299.8 points (2.1 percent). The broad-based S&P 500 finished at 1,588.85, up 35.57 (2.3 percent), while the Nasdaq Composite Index ended at 3,294.95, an increase of 91.09 points (2.8 percent).

Even so, the market’s unswerving zeal in the face of less-than-stellar economic reports has started to unnerve some market participants, who sense an emerging bubble that could pop painfully.

“The reality is we are in a very dangerous phase of the market,” said Mace Blicksilver, director of Marblehead Asset Management. “Good news is good news, bad news is good news.”

“This is a market that is built on Fed easing and Bank of Japan easing,” Blicksilver added. “It’s not built on fantastic earnings or employment getting better. Just on the availability of lots of money that is being funneled into the stock markets.”

Until recently, data on jobs, housing and other economic performance in early 2013 had been increasingly favorable. But there have been some highprofile disappointments in the last two weeks. The biggest blemish came April 5 when the Department of Labor reported that employers added a measly 88,000 jobs in March. The sequel to that came this Friday when the Department of Commerce reported that retail sales fell 0.4 percent in March from February, suggesting that federal tax increases and spending cuts could now be weighing on rank-and-file consumers.

“We are seeing a lot of ups and downs in the data but this one needs to be watched, because there are reasons to think the consumer is not going to be able to sustain strong spending,” said Joel Naroff of Naroff Economic Advisors. “Job growth has been mediocre, wage gains remain largely nonexistent and the cumulative impact of the tax increases and ultimately government worker furloughs and spending cuts should slow income growth,” Naroff said. Both JPMorgan Chase and Wells Fargo reported earnings that bested analyst expectations, yet the numbers suggested reason for concern.

Both companies were hit by weak profits on lending.

In addition, JPMorgan said results