Large-cap stocks saw their fortunes take an upswing after quarter two earning reports started trickling in. Technology companies particularly crossed expectations of low second-quarter earnings. The focal point of last week’s economic development centered on Fed Chairman, Bernanke’s, address of the congress. According to him, though the economy was on a recovery mode, economic activity had slowed down in the first half of 2012. Chairman Bernanke insisted on an early decision on spending cuts and tax increases. If the congress refuses to rise to the occasion, he expects an impending nightmare to turn into a reality. Investors are of the view that the Federal bank is gearing up to inject further stimulus into the economy and this made stocks move northwards on Tuesday afternoon and Wednesday. Based on this sentiment, the S&P 500 reached its highest level on Thursday.
On Friday, the week’s growing trend took a setback, after fears about a worsening European crisis hit the markets. Unemployment claims increased from 350,000 to 386,000 this week. However, there were two successful initial public offerings (IPO), the absence of which has led to market weakness in the past few months.
Many analysts are of the opinion that the weak investor sentiment may eventually prop up stock prices. Equity valuations with respect to bonds appear reasonable and hence there is some hope to look forward to. Both retail sales and industrial production was improving and were away from levels relate d to recessions.