Greece’s debt quagmire and failure on part of the European Union nations to reach a consensus to bail out Greece had stocks under pressure Friday and a retreat in energy shares stopped the Dow average from replicating a feat it last achieved in 1996.  

Weak energy shares, weighed down by a sharp drop in crude prices, hurt the blue-chip Dow average and the index dropped 37 points after eight consecutive sessions of advances.  However, the average ended the week 1% higher.  The Standard & Poor’s 500-stock index shed 5.93 points, or 0.5%, to 1,159.90.  For the week, the index rose 0.85%.  The Nasdaq fell 16.87 points, or 0.71%, to 2,374.41, but edged up 0.28% for the week.  On the New York Stock Exchange, declining issues beat advancing shares seven to three on volume of 1.98 billion shares.

Meanwhile, India’s central bank in an unexpected move last week raised its key lending and borrowing rates by 25 basis points, signaling the era of easy money was coming to an end as the ghost of inflation begins to open its mouth.  

Equity markets this week may find lot of ammunition in the form of the Obama healthcare bill, and Greece’s attempt to breathe life into its ailing economy.  While the March 25-26 EU summit in Brussels is expected to address Greece’s pending $27 billion in debt maturities over the next two months, reports suggesting Germany may not side with the EU in its efforts to save Greece fuel worries about the road ahead.  The German Chancellor Angela Merkel on Sunday said a bailout for Greece won’t be discussed at the summit. A Reuters report suggests, Greeks believe current austerity measures unfair, further casting doubts on its ability to reduce deficits from within.

Healthcare shares are expected to remain active as uncertainty over the bill’s fate is removed, and the near-universal healthcare coverage is extended to more Americans. The reform could have important consequences for health insurers and drug makers.  An afternoon Senate Banking Committee hearing on the financial reform bill may see heightened apprehension as analysts try to assess the Congress’ ability to find partisan-based votes.

The safe-haven US dollar rose 0.6% on the week against a basket of currencies following twin central banks moves to contain inflation and the Fed’s pledge to hold rates exceptionally low for an “extended period.” A higher US dollar, now up 3.5% year-to-date and 1.4% for the week hurt raw material prices, and sent oil and gas as well as basic material shares down 1.6% and 1.2%, respectively on the week.

Fed-speak this week include Dennis Lockhart (Monday), Plosser, Yellen (Tuesday), Hoenig (Wednesday), Pianalto and Bernanke (Thursday), and Warsh, Bullard, and Tarullo (Friday).  The earnings calendar includes numbers from Williams Sonoma (NYSE:WSM), Tiffany & Co (NYSE:TIF) and Phillips-Van Heusen (NYSE:PVH) today.

Zacks Investment Research