Daily Insight

U.S. stocks bounced between gain and loss on a couple different occasions Friday, ending the session slightly higher. For the week, the broad market ended essentially flat, down just 0.4%.

A strong regional manufacturing report offered the greatest boost to the market. a revised GDP reading that came in a bit higher than previously estimated may have helped a little too but the increase was mainly due to a downward revision on the inflation gauge tied to the report – nominal GDP was unchanged from the initial estimate, more on that below the jump.

The January existing home sales report kept the day’s gains to a minimum as sales posted the second-largest monthly decline on record; the largest decline occurred in the previous month.

Financial and industrial shares led the broad market higher. Bank stocks helped propel the financials after Barclays recommended buying shares of JP Morgan. I don’t know, JP Morgan is one of the best-run banks out there but the fourth-quarter FDIC report on the industry didn’t paint a pretty picture for the industry. The coverage ratio among insured banks slipped again last quarter to a level that is less than half where it was a few years ago when loan quality was strong – trouble lurks if loan quality fails to improve markedly, and quick.

Utility and consumer staples were the losers on the session, being the only two of the top 10 sectors to close lower on the session.
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Brent Vondera, Senior Analyst