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Closing Market Summary: Stocks End Upbeat Week on Mixed Note

The stock market finished an upbeat week on a mixed note. The S&P 500 added just under a point, holding its weekly gain at 1.0% while the Nasdaq lost 0.4%.

The major averages began the day on an upbeat note, but relinquished their opening gains during the first 90 minutes of action. The early sentiment was boosted by a better-than-expected nonfarm payrolls report for February (175K versus consensus 163K), but a closer look into the report suggested that the weather excuse, which has been commonplace for the past several weeks, may have been overused in justifying some of the disappointing economic data received in recent weeks.

Stocks retreated from their opening highs with the Nasdaq pacing the slide. Specifically, biotechnology underperformed for the second day in a row, which fueled much of the Nasdaq weakness. The iShares Nasdaq Biotechnology ETF (IBB 259.40, -1.74) lost 0.7% after being down as much as 2.6% at the start of the session. The biotech ETF posted a 1.9% decline for the week, but remains up 14.2% in 2014.

Although biotechnology was able to climb off its lows, the rebound coincided with selling in the traditional technology sector (-0.3%). As a result, the Nasdaq was pressured throughout the day.

Even though heavily-weighted sectors like technology and health care (-0.2%) weighed on the broader market, the S&P 500 held up relatively well thanks to the relative strength of the financial sector (+0.5%), which continued its recent outperformance. The influential sector finished the week with a gain of 3.0%.

Elsewhere among cyclical groups, energy (+0.4%) and industrials (+0.3%) outperformed while consumer discretionary (-0.1%) and materials (-0.5%) lagged. The energy sector posted a modest gain as crude oil rose 1.0% to $102.54/bbl. Despite today's increase, the energy space remains the weakest cyclical group of the year, down 1.8%.

Industrials, meanwhile, drew strength from transports. The Dow Jones Transportation Average added 0.4% after marking a fresh intraday record high at 7627.44.  

Despite the continued uncertainty surrounding the situation in Ukraine, stocks climbed into the close, suggesting participants remained hopeful that a worst case scenario would be avoided. The sentiment was a bit different in Europe where major regional indices finished on their lows after a Gazprom spokesman said the company could stop delivering natural gas to Ukraine since the country is behind on its payments. The news rattled the region considering Gazprom is a major supplier to the entire European continent and supply disruptions could affect other economies.

The Treasury market, however, did not reflect a flight to safety as the 10-yr note finished in the red with its yield up five basis points at 2.79%.

Participation was a bit below average as 710 million shares changed hand at the NYSE.

Taking a look at economic data:

* Nonfarm payrolls added 175,000 jobs in February after adding an upwardly revised 129,000 (from 113,000) in January. The consensus expected an increase of 163,000. Private payrolls were a little lighter, up 162,000 in February after adding 145,000 in January. The consensus expected private payrolls to increase by 170,000. Over the last several weeks, economists have pointed toward the winter weather as the reason for the recent economic slowdown. The above consensus result in the February employment report refutes that theory. Sectors that are normally impacted by weather events, such as construction of buildings (+100), reported positive payroll gains. These sectors should have seen a sizable pullback if weather was the root cause of the economic malaise. 

* The U.S. trade deficit widened in January to $39.10 billion from an upwardly revised $39.00 billion (from $38.7 billion) in December. The consensus expected the trade deficit to fall to $37.30 billion. The goods deficit rose to $59.30 billion from $58.70 billion, a gain of $0.70 billion. The services surplus increased by $0.50 billion in January to $20.20 billion. Exports increased 0.6% in January to $192.50 billion. Almost all of the increase can be attributed to a $1.80 billion increase in exports of nonmonetary gold and a $0.20 billion increase in artwork sales. 

* Consumer credit increased by $13.70 billion in January after increasing a downwardly revised $15.90 billion (from $18.80 billion) in December. The consensus expected consumer credit to increase by $11.80 billion in January. 

There is no economic data on Monday's schedule.

* Nasdaq Composite +3.8% YTD  * Russell 2000 +3.8% YTD  * S&P 500 +1.6% YTD  * Dow Jones Industrial Average -0.8% YTD 

Boeing to Inspect Wings of Undelivered Dreamliners for Cracks Airplane Maker Says Supplier's Manufacturing Defect Could Cause Delays in Delivering the Jets

Boeing Co. revealed Friday that a manufacturing problem had caused hairline cracks in the wings on some of its 787 Dreamliner jets, requiring inspections on 42 aircraft and delaying the delivery of some to airlines. Wing-maker Mitsubishi Heavy Industries Ltd. informed Boeing that a change in its manufacturing process may cause the cracks in the wings it produces for yet-to-be-delivered jets, according to a spokesman for the U.S. aerospace giant. Subsequent inspections revealed cracks on some jets, the spokesman said. The defect is a major headache for Boeing, which is working to consistently produce 10 Dreamliners a month this year, though it still plans to deliver around 110 of the jets in 2014 and said its revenue guidance for the year remained unchanged. The inspections and repairs at Boeing plants in Washington state, South Carolina and Mitsubishi facilities in Japan illustrate how manufacturing problems can be spread quickly through the supply chain while it builds Dreamliners at a record rate. Boeing said none of the 123 787s delivered to date are affected by the wing issue. A person familiar with the issue said the company was told by Mitsubishi in the second half of February of the issue after its routine quality checks. "We will work with customers to adjust delivery schedules as required," said the spokesman. Boeing and its partner are inspecting 787s with line numbers running from 151 to 193, representing around a fifth of all Dreamliners built since 2007, according to the same person familiar with the issue. The latest problem to affect the Dreamliner program stems from fasteners used to connect the wing ribs to the shear ties on the carbon fiber composite wing panel, according to two people familiar with the situation. The fasteners were over-tightened without the use of manufacturing fillers, compressing a gap in the structure and in some cases caused hairline cracks of less than an inch to carbon fiber composite shear tie that connect the rib to the lower skin of the wing panel. If left unchecked, it can cause unintended stress on the jet's structure and could lead to further damage. "We understand the issue, what must be done to correct it, and are completing inspections of potentially affected airplanes. We are addressing affected airplanes as required," said the spokesman. The manufacturing defect is a rare significant quality defect for the Japanese aerospace supplier, whose quality has traditionally been a model for Boeing to emulate inside its own factories. Mitsubishi wasn't immediately available for comment. A Boeing supplier in Italy made a similar manufacturing error discovered in 2010 when assembling horizontal tails for the Dreamliner, requiring significant rework to dozens of aircraft. Mitsubishi builds the entire carbon fiber composite 787 wing at its Nagoya, Japan, factory before it is shipped by a heavily modified 747 to Boeing's final assembly lines in Everett, Wash., and North Charleston, S.C. Japanese suppliers build 35% of the Dreamliner, the first jetliner to be made from a majority of carbon fiber composites. A spokesman for Boeing said it expects each airplane will take one to two weeks to inspect and correct, depending on its position in the production process. About 17 of the 42 aircraft are fully completed and seven have been undergoing pre-delivery flight tests, according to external sources tracking the program. The rest of the 787s are in various states of assembly or the wings are still in Japan and have yet to be shipped for final assembly. The company said its 2014 revenue guidance of between $87.5 billion and $90.5 billion remains unchanged, and that it still plans to deliver 110 787s this year. However, deliveries planned for the first quarter could slip beyond March, the close of the company's first quarter.

La Banque centrale de Russie transfère ses réserves placées aux Etats-Unis

EXCLUSIF La banque centrale de Russie a retiré des banques américaines une partie importante de ses avoirs. Des milliards de dollars transférés en Europe. D’après un expert de la finance, la Banque centrale de Russie a retiré jeudi 6 mars une importante partie de ses réserves déposées dans les banques américaines pour les transférer dans des établissements européens. Impossible de connaître le montant exact de ces transferts, mais selon notre spécialiste, ils pourraient se chiffrer en dizaines de milliards de dollars.

Ce mouvement montre que, dans son conflit avec le nouveau pouvoir en Ukraine, le président russe, Vladimir Poutine, envisage tous les scénarios. Y compris celui qui verrait Washington geler les avoirs russes déposés dans ses banques.  D’où l’opération menée jeudi.

Poutine inquiète les investisseurs étrangers

D’autres déplacements de capitaux ont été observés depuis plusieurs mois.  Mais cette fois il s’agit d'avoirs qui ont quitté les banques russes à un rythme très élevé: environ 25 milliards de dollars par mois, soit 300 milliards en une seule année ! Une catastrophe pour Moscou car ces mouvements affaiblissent le rouble et jouent sur la croissance : seulement 1,2% l’an dernier contre +7% en 2000.

Des transferts aussi massifs avaient déjà eu lieu à la fin des années 1980 et lors de la décennie 1990 du temps où le pays était dirigé par Mikhaïl Gorbatchev et Boris Eltsine. Aujourd’hui, bis repetita, les investisseurs n’ont plus confiance en Poutine.

NY Fed President Bill Dudley reaffrims that he expects sustained growth and that current accommodation is needed for some time to come

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BN 03/07 16:32 *DAIMLER EXPECTS `SIGNIFICANT CASH FLOW' FROM SALE BN 03/07 16:31 *DAIMLER MAKING USE OF PUT OPTION AGREED IN 2011 BN 03/07 16:31 *DAIMLER SELLING 50% INTEREST IN ROLLS ROYCE POWER SYSTEMS

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*DAIMLER SELLING 50% INTEREST IN ROLLS ROYCE POWER SYSTEMS 2014-03-07 16:32:28.67 GMT

--JIM SILVER

-0- Mar/07/2014 16:32 GMT