Aaron Task
Traders may not believe in Santa Claus or the Easter Bunny, but they sure put their faith in Goldilocks this week as major averages rallied sharply amid stronger-than-expected corporate earnings and benign inflation data.
The Dow Jones Industrial Average rose 2.8% for the week, punctuated by Friday's gain of 153 points, or 1.2%, to 12,961.98. Friday marked the Dow's third-straight record close and 15th advance in the past 16 trading days. The day's rally followed stronger-than-expected earnings from components Caterpillar (CAT Quote - Cramer on CAT - Stock Picks), Honeywell (HON Quote - Cramer on HON - Stock Picks) and American Express (AXP Quote - Cramer on AXP - Stock Picks). With approximately 25% of S&P 500 companies reporting thus far, 66% of first-quarter earnings have been better than expected. "People were anticipating [earnings] would not be so good," New York Stock Exchange floor trader Doreen Mogavero, president & CEO of Mogavero Lee & Co., said Friday in an interview on TheStreet.com TV. "So it was a good surprise and made people very enthusiastic." Indeed, the Dow was joined in record territory this week by the Russell 2000, Dow Transportation Average, Dow Utilities and S&P MidCap 400. As for the other so-called major averages, the S&P 500 hit a six-and-a-half year high, gaining 2.2% this week and rising 0.9% to 1484.35 on Friday. Beyond financials and industrials, the S&P's rally was led by resurgent biotech and health care stocks such as Johnson & Johnson (JNJ Quote - Cramer on JNJ - Stock Picks), Merck(MRK Quote - Cramer on MRK - Stock Picks), MedImmue (MEDI Quote - Cramer on MEDI - Stock Picks) and Amgen (AMGN Quote - Cramer on AMGN - Stock Picks).
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