It was three cheers for the bulls last week. Just when we thought we had seen the end of the rally, the market came roaring back to make new highs. The Dow closed at a new high for the year and is up almost 50% from its lows. For the week ended Aug. 21:
- Dow: Up 2% to 9,505.96
- S&P 500: Up 2.2% to 1,026.13
- Nasdaq: Up 1.8% to 2,020.9
Last week saw a bigger-than-forecast leap in existing home sales and positive manufacturing data for the first time in almost a year from the Philadelphia region. On the flip side, one in every eight homeowners is late on mortgage payments or facing foreclosure. Fed Chairman Ben Bernanke kept optimism alive, confirming brewing hopes that an economic recovery is indeed in sight.
Economy continues to weigh on companies
In contrast, Lowe's clocked a 19% decline in profits, as the recession and unseasonably cold and wet weather in the Northeast -- a key market for Lowe's -- caused consumers to put off remodeling projects. The company also issued a weak forecast, stating it will taper expansion plans for North America.
As earnings season winds down, it could be quiet this week. Volume is typically light in the last weeks of August. Investors will look to economic data for continued signs of a recovery. This week brings consumer confidence and sentiment reports, the S&P Case-Shiller home price index, durable goods orders, a second reading on second-quarter GDP, and personal income data.
Jennifer Schonberger owns shares of Home Depot, but does not own shares of any of the other companies mentioned in this article. Home Depot and Lowe's are Motley Fool Inside Value recommendations. Heinz is a Motley Fool Income Investor pick. The Motley Fool has a disclosure policy.