Weekend Reading: Relief Rally

Good Sunday afternoon, and welcome to another edition of Weekend Reading. First a look back at the week that just finished, then a look forward to the week ahead, and, lastly, a summary of articles and papers worth reading.

It was another week of market advances, despite some wobbliness on the earnings front toward the end of the week. The Dow rose 4%, the S&P 500 gained 4.1% and the Nasdaq climbed 4.2%. All three major U.S. indices are now in the green for the year, which would have been a big surprise to most people back in March.

Looking forward to next week, we will likely see more of same. Investors are in the mood to ignore negative earnings news -- witness the reaction to Microsoft(MSFT Quote), UPS(UPS Quote) and others -- so there is a little reason to think that will change next week (although it will eventually correct). Investors also are in a relief-rally mood, one driven by the recovery of markets from the levels of March, but not driven by any consistent signs that the economy is set to return to historical levels of GDP growth. While we could see a faster recovery to those levels in emerging markets, that will not be the case in the U.S. and Europe.

Turning to economic indicators, next week will bring data on new-home sales for June, the July consumer confidence index, durable goods orders for June and the first reading on second-quarter U.S. GDP. Investors will also pay close attention to Treasury yields amid a flood of new U.S. government debt.