Week in Review: Dow Posts Gains for Third Straight Week Amid Record Streak

The Dow Jones Industrial Average closed out Friday with gains for the third week in a row as a record-breaking streak propelled the index higher.

The Dow Jones Industrial Average closed out Friday with weekly gains for the third time in a row as a record-breaking streak propelled the index higher. 

The Dow has risen 0.96% over the past four days in a holiday-shortened week. The S&P 500 increased 0.69% and the Nasdaq jumped 0.12%. 

The Dow climbed every day this week, securing its longest record-breaking streak in three decades. The blue-chip index has closed higher after 11 consecutive sessions thanks to optimism over a forthcoming tax plan from the White House. 

However, with few developments on that front, the record rally has taken on a life of its own, benefiting from individual stock moves, such as a better-than-expected quarter from Walmart (WMT) and reports DuPont (DD) could clear regulatory hurdles in its merger with Dow Chemical (DOW) .

"Sentiment in the market has generally been very upbeat except for the first few hours after the election results," Bodhi Ganguli, lead economist at Dun & Bradstreet, told TheStreet. "There is a lot of expectation of business-friendly policies from the new administration... We have to wait for details to see exactly how they're implemented, but the economic policies that have been proposed are very conducive to higher fundamental growth of the economy."

Overall economic improvements have moved the Federal Reserve to shift its rhetoric toward hawkishness. In minutes from the Jan. 31-Feb. 1 meeting released this week, members of the Federal Open Market Committee said it would be appropriate "fairly soon" to make a move higher. Members said that holds true so long as the incoming labor market and inflation data was in line with or stronger than expected.

Even as the Fed says the March meeting is live, the market continues to only expect a small chance of a near-term hike. This could cause some turbulence in coming weeks, warned Bill Merz, markets strategist at the Private Client Reserve at U.S. Bank. 

"A surprise near term hike could trigger volatility," said Merz. "Our base case is for two Fed hikes in 2017 with a chance of a third. Other risks include delays in passing material legislation in the U.S., and a surprise Le Pen victory in the French Presidential election, though odds of the latter remain relatively low for the time 

Retailers were in the spotlight this week with a number of chains reporting on their performance over the critical holiday shopping season. Walmart (WMT) , the world's largest retailer, topped fourth-quarter earnings estimates, raised its dividend and guided for an in-line first quarter. Same-store sales in the U.S. climbed 1.8%, beating consensus of 1.3% growth.

Walmart wasn't the only retailer to top estimates. Home Depot (HD) reported a solid quarter which benefited from a healthy housing market. The DIY home-improvement retailer reported 5.8% sales growth at locations open at least a year, higher than estimates of 3.5%.

J.C. Penney (JCP) fell short of profit and sales estimates over its fourth quarter. The department store chain also announced plans to shutter as many as 140 stores over the next few months. Nordstrom (JWN) topped quarterly profit and reported sales growth over its recent quarter, enjoying the bulk of gains at its discount stores

Macy's (M) beat analysts' quarterly estimates on its bottom line, while fourth-quarter same-store sales fell 2.1%. Kohl's (KSS) exceeded quarterly estimates and met full-year profit expectations. The retailer said it saw "declines in brick-and-mortar traffic" over the quarter, though online demand countered some of that drag.

TJX Cos. (TJX) , which owns TJ Maxx, narrowly beat profit and sales estimates over its fourth quarter. Same-store sales rose by 3%, topping expectations of 2.5% growth. The retailer also said it plans to repurchase at least $1.3 billion worth of shares over this fiscal year.

Better-than-expected earnings from retailers came as a relief to investors who were wary heading into the industry's portion of the earnings season. Slower traffic at malls and cautious consumer spending are expected to have contributed to retail weakness. Retail earnings are expected to increase by 5.2% over the fourth quarter, according to Thomson Reuters estimates.

By Keris Alison Lehiff

Source: https://www.thestreet.com/story/14015842/1/week-in-review-dow-posts-gains-for-third-straight-week-amid-record-streak.html