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Highlighting just how fickle equity markets can be, key indices managed to notch gains last week in spite of precarious conditions in Europe ahead of Greek elections and disappointing economic data. For the week, the S&P; advanced 1.3%, the Dow 1.7%, and the Nasdaq 0.5%.
The week started on a sour note as investors faced Spain’s request for $125B to shore up its banks, followed by a raft of mostly disappointing economic data: unemployment claims were up, retail sales were down, and inflation rose in May. Investors shrugged off the lackluster data and markets rose on hopes that the Fed will agree to additional quantitative easing when it meets next week – though this assumption is premature. Fed Chairman Bernanke’s comments in a speech last week divided the talking heads right down the middle. While there are some who believe the Fed will take action due to the disappointing economic data we've been seeing, there are others who believe the bad data isn't sufficient to force the Fed's hand.
