Despite a move by the Swiss National Bank (SNB) on Thursday to lift its currency ceiling as well as higher oil prices on Friday, U.S. stocks still managed to finish last week on a high, breaking a 5-day losing streak. The main benchmarks however still ended with losses for the 4th straight week. According to analysts, due to the release of disappointing U.S. inflation data, the Federal Reserve is likely to delay interest rate hikes. Meanwhile, other data released showed that the U.S. consumer sentiment hit its highest level in eleven years, increasing above analyst expectations. Also core CPI data, which excludes energy and food, was flat last month. Analysts were expecting a rise of 0.1 percent. At the close of U.S. trading, the Dow Jones Industrial Average (DJIA) advanced 1.1 percent to 17,511.57, losing 1.3% for the week while the S&P 500 index (SPX) also closed up 1.3% at 2,019.42. The SPX was down 1.2 percent for the week. Following the upward trend was the Nasdaq Composite index (COMP) which ended Friday’s session with a gain of 1.4% at 4,634.38, recording a weekly loss of 1.5 percent.
On Friday, the U.S. dollar (USD) traded higher against most major currencies. The greenback was supported near 12-year highs after positive U.S. consumer sentiment data was released which had jumped to its highest level in January in the last eleven years. According to the report released by the University of Michigan, the CSI (consumer sentiment index) rose to 98.2, up from 93.6 in December. Analysts were only expecting a rise to 94.1 and this increase marked the highest level since the beginning of 2004. Meanwhile the consumer price inflation declined by 0.4 percent last month. In currency trading, the EUR/USD traded at 1.1525, down 0.93 percent while the GBP/USD also traded down 0.32 percent at 1.5132. Against the Japanese yen, the USD traded higher at 117.15, up 0.87 percent. After the Swiss National Bank scrapped the exchange rate floor of 1.20 per euro on Thursday, the USD/CHF traded at 0.8580, up 2.02% on Friday. Also the U.S. dollar index was at 93.07, up 0.82 percent.
On Tuesday, before the market opens, Morgan Stanley is expected to report its fourth-quarter results. According to analysts from Thomson Reuters, the corporation is expected to report earnings of 48 cents a share compared with fifty cents a year earlier. Also, Morgan Stanley is forecast to report revenue of $8.08 billion. This is compared to revenue of $8.2 billion reported a year earlier. The wealth management arm of Morgan Stanley has performed exceptionally well in recent quarters and has delivered rising profit margins. In the last quarter, the corporation hit the low end of it 22-25% target range set for the end of this year when it reported pretax profit margins of 22 percent. Investors will also be looking out for the corporation’s next move in response to a proposal by the Federal Reserve which will require the largest banks in the U.S., including Morgan Stanley, to meet a higher capital charge.
On Monday, oil prices declined again despite rallying by the end of last week. On Friday, oil prices pushed higher after the International Energy Agency made bullish comments which eased investor concerns regarding the global supply glut and the weakening demand. As a result, Brent for March delivery advanced by 3.94 percent or $1.90 to settle at $50.17 a barrel on the ICE Futures exchange in London. Meanwhile, New York traded oil futures also advanced by 0.67 percent or 33 cents which marked the commodity’s first gain in 8 weeks. Adding to the positive tone were comments from Baker Hughes, an industry research group, which showed that only 1,366 oil rigs in the U.S. are currently drilling for oil. This was down by 55 oil rigs which marked the lowest number since the end of October 2013.