Markets see strongest week in 5 years

Investors have regained money lost as the market recovered this week. Photo/123RF

Stocks closed out their strongest week in five years Friday and have now recovered more than half of the losses they suffered in a plunge at the beginning of the month.

Investors got back to buying stocks almost as quickly as they started dumping them.

The gain Friday was the sixth in a row for the Standard & Poor's 500 index.

A combination of cheaper prices for stocks as well as solid company profits put investors back in a buying mood.

The S&P 500, which many index funds track, has risen almost 6 per cent in its current streak.

Investors haven't hesitated to buy the same types of stocks that did well before the market's recent slump, including technology companies and banks.

In a typical market downturn, investors might avoid stocks that have had huge run-ups out of fear they had gotten too expensive.

Instead, investors are still betting on more strength in the economy and are buying companies that tend to do better in times of faster growth.

After an unusually long period of calm, stocks plunged at the start of February as investors worried about inflation and rising interest rates.

The S&P 500 fell as much as 10 per cent from its latest record high reached January 26.

But investors weren't scared off for long.

"Rates started to stabilize and you got some better economic data, and earnings in general have been pretty good," said Sameer Samana, global equity and technical strategist for the Wells Fargo Investment Institute.

Samana said bond and credit markets showed that the fear wasn't spreading.

Companies were still able to borrow at relatively low rates, which showed lenders weren't concerned the economy was weakening.

"A lot of people probably looked at stocks vs. credit and probably thought 'if credit's not feeling it, things must not be all that bad,"' he said.

The S&P 500 gained 1.02 points, or less than 0.1 per cent, at 2,732.22.

That includes a gain of 4.3 per cent this week, its best since January 2013.

The Dow Jones industrial average rose 19.01 points, or 0.1 per cent, to 25,219.38.

The Nasdaq composite lost 16.96 points, or 0.2 per cent, to 7,239.47.

Homebuilders rose after the Commerce Department reported that construction of new homes jumped 9.7 per cent in January.

That was the highest level since October 2016, and permits, a sign of future construction, also climbed.

Investors have regained money lost as the market recovered this week. Photo/123RF

The Dow was up 232 points at about 12:30 pm, shortly before Special Counsel Robert Mueller announced the indictment of 13 Russians and three Russian organizations in a plot to interfere in the 2016 US Presidential election.

Stocks gave up their gains after that and spent the afternoon meandering between small gains and losses.

The indictment says the Russians used social media propaganda, at times helping Trump and harming the prospects of Democrat Hillary Clinton.

Facebook fell $2.60, or 1.4 per cent, to $117.36 and Twitter fell 55 cents, or 1.6 per cent, to $33.06.

Samana, of Wells Fargo, said the recovery from the recent 10 per cent plunge may not be a smooth one either.

"We see another year of solid returns" for stocks, he said. "It'll just come with these bouts where people worry about rates and inflation and the end of the cycle."

Since the market hit its recent low point on February 8, the S&P 500 technology index is up 8.5 per cent and its financial company index is up 6.7 per cent.

This week alone, Apple has jumped 10 per cent and chipmaker Applied Materials is up 14.5 per cent.

Amazon, one of the best performing S&P 500 companies this year, rose 8 per cent for the week.

In Japan, the Nikkei 225 index climbed 1.2 percent. Markets in China and South Korea were closed for lunar new year celebrations.

- AP