The beginning of 2016 marked the worst start to a year in Wall Street history but another week of gains helped to wipe out most of the damage.
Bulls mobilized this week, thanks to another surge in crude oil and a dovish Federal Reserve, to push markets out of the funk that plagued them in January and February. For the week, the S&P 500 added 1.3%, the Dow Jones Industrial Average climbed 2.2%, and the Nasdaq rose 1%. The week's gains were enough to erase year-to-date losses on the S&P 500 and the Dow.
For the year, the S&P 500 has increased 0.35%, while the Dow is up 0.1%. Both benchmark indexes fell into correction territory in mid-January but have since recovered -- they're down just 4% from their 52-week high.
Much of the week's gains were triggered after the Fed recommitted to a gradual rate-hike timeline, easing investor concerns over the pace of future tightening. The central bank held rates unchanged, a move Chair Janet Yellen described as "prudent" in a press conference following the central bank's two-day meeting.
The Fed now expects two rate hikes this year, down from December's forecast of as many as four.
"The market started to anticipate this, and so it's just confirmation that the Fed is realizing that the landscape looks a little differently today than it did in December when they started this process of normalizing," said David Jilek, chief investment strategist at Gateway Investment Advisers.
Yellen "seems to be reinforcing the idea that the situation is more fluid," he added.
Crude oil also dictated market direction for much of the week, closing near its highest level of the year, on higher confidence that major oil-producing countries will agree to a production freeze. Members of the Organization of Petroleum Exporting Countries and non-member Russia will meet in Qatar on April 17 without Iran, which had previously said it wouldn't commit to a freeze because it's trying to boost production to pre-sanction levels.
Closer to home, a weekly read on domestic oil inventories boosted hopes an oversupply crisis is easing, while an increase in active rigs undermined confidence. The Energy Information Administration reported a 1.3-million-barrel increase in inventories over the past week, far below estimates of 2.7 million barrels. On Friday, Baker Hughes reported the number of active U.S. oil rigs rose by 1 to 387 in the past week, the first increase of the year.
Oil prices, which touched 13-year lows earlier in 2016, are now up 6.2% for the year.
Late-season earnings continued to roll in, particularly from retail companies showing worrying weakness over the holiday quarter. Teen retailer Aeropostale (ARO) plummeted after reporting another quarterly loss, while sales slumped 16%. Guess (GES) tumbled after projecting a sales decline in its first quarter of 0.5% to 1.5%.
Jeweler Tiffany (TIF) beat quarterly estimates, though warned of a likely first-quarter disappointment. Housewares retailer Williams-Sonoma (WSM) also issued a disappointing outlook: The chain expects first-quarter earnings of no higher than 52 cents a share, 3 cents short of consensus.
Tech companies reporting this week fared better in their recent quarter. Adobe (ADBE) topped estimates on the back of strong growth in cloud computing services, while Oracle (ORCL) reported a better-than-expected performance and boosted its share buyback program by $10 billion.