Warren Buffett and G-20 meeting are weekend factors
By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) — U.S. stock indexes in the days ahead will face barriers including rising energy costs if they are to extend gains beyond current multiyear highs.
“We are winding down earnings, so next week may be a macro-headline-driven market,” said David Rolfe, chief investment officer at Wedgewood Partners in St. Louis, Mo.
On Friday, U.S. stock indexes settled with weekly gains that had the S&P 500 Index SPX +0.17% closing at its highest level since June 2008 after better-than-anticipated reports on consumer confidence and home sales.
The economic reports helped offset concern that came with escalating tension over Iran’s nuclear program and the rising price of oil, with crude futures for April delivery CLJ2 +1.66% climbing 1.8% to $109.77 a barrel, their highest close since May. Read more on oil futures.
The price of gasoline is starting to be a concern for investors.
“Five dollars a gallon has already poked its head out in California, plus there is $4 a gallon in many spots around the country. The market has rallied in the face of that,” said Rolfe.
The back-and-forth between upbeat economic reports and concern about the potential impact on consumer spending from higher energy costs is likely to continue.
“Either we are going to have resolution to the geopolitical tensions in Iran or we’ll continue to be concerned about disruption in supply and watch it rise,” said Art Hogan, a managing director at Lazard Capital Markets.
Up 0.3% for the week, the Dow Jones Industrial Average DJIA -0.01% fell 1.74 point on Friday to 12,982.95.
The S&P 500 rose 2.28 points, or 0.2%, to 1,365.74, up 0.3% from the week-earlier finish, while the Nasdaq Composite COMP +0.23% climbed 6.77 points, or 0.2%, to 2,963.75, a weekly gain of 0.4%.
For those waiting for stock valuations to come down to buy equities, “it ain’t happening,” said Rolfe. “The dip buyers are out there in force.”
Warren Buffett’s annual letter to Berkshire Hathaways Inc. BRK.A +0.72% clients should help set the tone for the start of the week, with the Berkshire chairman’s yearly message delivered electronically Saturday morning.
The billionaire will likely offer his “informed opinion on the state of the U.S. economy,” said Rolfe, whose company counts Berkshire as its second-largest holding.
“Maybe he’ll go into more specifics of earnings power of some of his subsidiaries,” said Rolfe, citing as example Burlington Northern, now called BNSF Railway, which would have “implications for other railways.”
