15 Reasons Markets Rallied But Ended Lower

Dow 12,441 S&P500 1,331 Nasdaq 2,796 Gold 1,536 Oil 100

Markets opened lower on Monday and were essentially flat until rallying Friday. Regardless, markets still closed lower week-over-week. Oil (NYSE:USO) added a buck. Gold (NYSE:GLD) and Silver (NYSE:SLV) continued to show relative strength as the US Dollar (NYSE:UDN) ended the week hitting fresh two-week lows.

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Now, for the 15 reasons markets moved this week:

Monday

1) Europe’s PIIGS are back at the trough. The general market patterns have been for investors to focus on companies or the sovereign debt crisis. When companies are in the spotlight (e.g., earnings season), stocks tend to ignore debt woes. When companies can’t keep the spotlight, the default worry is sovereign debt. Today, Italy (NYSE:EWI) took a credit outlook rating cut from Standard & Poor’s (NYSE:MHP). Investors were back chattering about whether this is the next domino to fall. Don’t Miss: Wall St. Cheat Sheet Assistant Editor Xander Schachtel Explain How the VIX is Reacting to the PIIGS.

2) Asia had its own woes to worry about. The most recent reading of the HSBC (NYSE:HBC) China Manufacturing Purchasing Managers Index, showed a 10-month low in manufacturing activity. The economic news sent Shanghai shares 3% lower and had hedge funds buzzing about a slowdown in China (NYSE:FXI). Also, goliath contract manufacturer Foxconn reported a tragic factory explosion. The news continues to create worry for Apple (NASDAQ:AAPL) investors who have been fretting over supply chain blunders.

3) US States are trying to take currencies into their own hands. States may want the Feds to pick up the tab for unemployment insurance, but they sure don’t want Uncle Sam’s worthless greenback (NYSE:UDN). Utah is ready to join the goldbug craze and accept gold (NYSE:GLD) and silver (NYSE:SLV) as legal tender. If you’re considering whether to join Utah’s movement and invest in gold, first check out Gold: The Major Pros and Cons for Investors.

Tuesday

1) Market police continue to blow whistles. Yesterday Italy (NYSE:EWI) took a credit outlook rating cut from Standard & Poor’s (NYSE:MHP), and today Moody’s (NYSE:MCO) the streak alive by threatening to take the downgrade sword to the UK banks. As if that wasn’t enough for bankers to skip dessert, New York Attorney General Eric Schneiderman got his investigation on by expanding his mortgage fraud probe to the bond insurers: Ambac Financial Group (PINK:ABKFQ), MBIA Inc. (NYSE:MBI), Syncora Holdings Ltd. (PINK:SYCRF), and Assured Guaranty Ltd. (NYSE:AGO).

2) Oil rallied on Goldman’s flip-flop. In April, Goldman Sachs (NYSE:GS) screamed “Sell Oil Now!” Today they went Chinatown on us and shouted “Buy Oil Now!” Regardless, on days when Oil (NYSE:USO) rises strongly, the econ bears take the stage warning of higher gas prices and weaker consumer sales — a good reason to sell stocks. But don’t tell them about airline woes because canceled flights from the volcano are sure to weigh on fuel demand in the near future.

3) IPOs were hot, the NASDAQ was not. Shorts got their faces melted off in LinkedIn (NYSE:LNKD) at 2PM, while white hot Russian search engine Yandex (NASDAQ:YNDX) popped 55% at its initial public offering and Glencore (LON:GLEN) gave underwriters a reason to cheer.

Wednesday

1) Commodities surged. Now that Goldman Sachs (NYSE:GS) is bullish on Oil (NYSE:USO) and GE (NYSE:GE) is madly in love with gas (NYSE:UGA), investors are rushing back to commodities (NYSE:RJI) despite tons of data regarding slower economic growth. Check Out “GE: Gas is Cheap and We’re Investing in the HUGE Bull Market.”

2) US Durable Goods orders sucked. Yup. They were not good. And transportation equipment led the way down with 9.5% drop. Add on this week’s news about slowing growth in China (NYSE:FXI) and the UK (NYSE:EWU), and it’s a surprise today’s trade was “risk on”.

3) A financial media legend passed. Unrelated to markets, CNBC anchor Mark Haines passed today. He was the founding anchor of “Squak Box”.

Thursday

1) Investors are betting Helicopter Ben flies to the rescue. A few weeks ago the Fed was playing Jedi mind games to manage expectations for tightening monetary policy. But investors think the game may be favoring more easing after today’s weak GDP number and waterfall of analysts cutting their GDP targets. You know what that means … Risk On!

2) Microsoft carried the Nasdaq higher. You know what happens when you try to buy the New York Mets AND try to get Steve Ballmer fired in the same 24 hours? People try to show you how much they don’t care about your perceived power. Today David Einhorn, president of Greenlight Capital (NASDAQ:GLRE) learned just that as Microsoft (NASDAQ:MSFT) shareholders gave him the middle finger after saying Steve Ballmer should get the boot.

3) Luxury jeweler Tiffany & Co. proved we’re not double-dipping. Well, at least someone forgot to tell high-end consumers if indeed the economy is set for a crash. Tiffany & Co. (NYSE:TIF) released earnings showing a 20% increase in revenues over last year. That’s a great indicator there’s still a significant number of people making money and not worrying about pink slips.

Friday

1) The more econ data sucks, the more traders await more Fed puts. Today we saw the Pending Home Sales Index plummet over 11%! “No worries. Bernanke.” Consumer Spending was weak. “Really? Have no fear, Bernanke’s here.” And finally we learned consumers have a rosier sentiment than last month. “RISK ON!”

2) The US Dollar got punched in the face. That’s right. A two-week low. Even with the EU facing headlines of a deepening sovereign debt crisis, no one wants a greenback (NYSE:UDN). The dollar’s demise helped Oil (NYSE:USO), Gold (NYSE:GLD), and commodities (NYSE:RJI) lock in winning days.

3) Tech continues to stay in focus. We started the morning with news Ebay (NASDAQ:EBAY) is suing Google (NASDAQ:GOOG) for stealing PayPal’s secrets and using them to create Google Wallet. Microsoft (NASDAQ:MSFT) attempted to promote some tablet PC hype, and Amazon (NASDAQ:AMZN) lost a ton of cash subsidizing the pop music goddess Lady GaGa’s new album.

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