U.S. stocks gave back early gains on Friday, which occurred nearly every session last week -- the exception being Wednesday when an afternoon rally recovered from mid-session weakness.  But the downward pressure on stocks was mild as the broad market lost just 0.32% for the week.

Energy, telecoms and health care closed higher on Friday.  Financials, industrials and basic material shares led the other seven of the major industry groups that closed lower. 

It wasn’t much of a surprise to see energy outperform the broad market on Friday as the price of crude oil rallied another $2.26 to $112.79/barrel.  Crude is lower this morning by holding the $112 handle.  And while we’re on energy, wholesale gasoline jumped 11 cents to close the week at $3.26/gallon, which has the national average price at the pump up to $3.77. 

The dollar continues to get crushed as it is down below the 75 handle on the Dollar Index (DXY) this morning.  The last time the DXY fell below the 75 handle the price of crude powered to $145/barrel – DXY hit 71.35 in the spring of 2008, which is the all-time low since the index’s inception in 1967. 

For the week, the S&P 500 and NASDAQ Composite fell 0.32% and 0.56%, respectively.  Mid and small cap stock indices fell 0.88% and 0.69%, respectively.

The Dow Industrial Average managed to gain three points; international indices also gained ground on balance. 

Market Activity for April 8, 2011

Sector Activity for April 8, 2011

Wholesale Inventories

Distributors’ inventories rose 1.0% in February, which follows a similar gain for January.  However, in terms of GDP it is all about the rate of growth and on this basis inventory rebuilding has cooled not just over the past two months but over the past couple of quarters.  Inventory rebuilding, or the lack thereof, weighed heavily on fourth-quarter GDP after the segment fueled much of the recovery during the previous four quarters.  Unless we get a huge rebuilding for March, the inventory segment will weigh on growth again for the first quarter. 

On the other side of the report, wholesalers’ sales fell for the first time in eight months in February.  It did come after a huge 3.3% increase in the previous month, so I wouldn’t get too concerned about declining sales becoming a trend.  Nevertheless, the weakness (even if only transitory) isn’t going to help fuel a big rebuilding number for March. 

Add the drag that inventories will place on Q1 GDP to the weak real (inflation-adjusted) personal spending results we’ve received thus far and it’s going to be tough for GDP to print something higher than 2.5% when the results are released on April 28.

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Have a great day!

Brent Vondera, Senior Analyst

Phone: 636-449-4900