Last week saw U.S. stocks rise to a two-month high with the S&P 500 closing at 1238.25 (up 1.1%). Bonds were little changed on the week as the 10 year Treasury note closed at 2.21%. No Joy in Mudville has changed to, perhaps, a glimmer of hope in stock land … we’ll see.
Earnings reports have been reasonably strong with over 70% of companies reporting better-than-expected results. Corporate balance sheets remain strong, and we suspect that things are not quite as bad as headline news would lead to us to believe. Mergers and acquisitions could provide a bump to market sentiment as companies look to put their large cash positions to work.
Valuations remain reasonable, and we look for prices to move higher into year-end. Earnings reports and news out of Europe will likely dictate market direction this week. Let’s hope that European leaders are serious enough to stem the euro crisis.
“Take time to deliberate; but when the time for action arrives, stop thinking and go in.”