Markets lost some exuberance last week as news out of Europe weighed on U.S. investors. Despite some selling pressure however, the rally rolled on as the S&P 500 edged to a five-year high. Major indices ended the week mixed, with the S&P 500 gaining 0.31 percent, the Dow losing 0.12 percent, and the Nasdaq gaining 0.46 percent. Friday showed very low volume as snowstorm Nemo pounded the Northeast and traders watched the clock, waiting for the final bell to ring so they could hustle home. Even so, a batch of encouraging economic data was enough to push the S&P 500 to its highest level since November 2007. Reports showed that international trade in China and Germany has improved, and that the U.S. trade deficit narrowed in December, indicating that global demand is improving. To the contrary, the December wholesale inventory report released earlier in the week showed a 0.1 percent decrease, which was significantly worst than expectations. This carries negative implications for the upcoming revised fourth quarter GDP growth report as the Bureau of Economic Analysis had estimated inventory growth of 0.7 percent in their preliminary estimates. Troubles in Europe drove most of the market action last week as downbeat European equities prompted selloffs in the U.S. Scandals have rocked European markets as regulators investigate several banks for trading irregularities as well as one of Greece's leading statisticians, who has been charged with falsifying fiscal data. According to European Central Bank President Mario Draghi, the Eurozone economy remained weak and contracted in the second and third quarters of 2012. Two quarters of negative growth meets the technical definition of a recession, and economists widely expect the malaise to continue into 2013. On the positive side, recent gains in European equities and a strong Euro show that investors have regained confidence in the Eurozone's ability to clean up its mess. Looking ahead, analysts will have a few January and February economic reports to chew on this week, which economists widely expect will show that the U.S. economy started off 2013 at a modest pace. January retail sales figures come out on Wednesday, and the preliminary February reading on consumer sentiment will be released Friday. Chinese markets will be closed all of this week in observance of the Chinese New Year, so attention will be focused on European and domestic headlines. While there is no way to know what will happen with the winter we've been enjoying, our primary hope is that the fundamentals will continue to show improvement in the worldwide economy.Headlines• Winter storm sends fuel prices higher. The storm pounding the Northeast is also hitting consumers with a one-two punch of high home-heating costs on top of record-high gasoline prices. High prices are largely due to increased domestic and foreign demand for crude oil as well as potential supply disruptions due to the storm. • Housing market may be a bubble. Economists think that the housing market may be showing signs of a bubble. Historically, housing prices rise about three to four percent a year; however, last year, home prices grew eight percent, a similar rate to before the crash in 2007. • Political uncertainty dogs Spain and Italy. Selloffs hit European markets last week as investors show unhappiness with instability at the top of the two major European nations. Spanish President Mariano Rajoy is embroiled in a corruption scandal that threatens his tenure, and Italian Prime Minister Mario Monti may lose the February 24 election. • Americans tapping into home equity again. Despite the nearly 11 million borrowers who are underwater on their mortgages, home equity loans are on the rise again. As home prices rise - increasing equity, and consumers regain confidence in the economy, borrowers are again turning to lines of credit on their houses to fund purchases, fueling a 19 percent rise in home equity loan originations. Mark Ballenger is an investment and financial planning consultant offering services to individual investors and business owners. His company, Centennial Capital Partners, has a location in Avon and can be reached at 970-471-9962. This report has been created with the cooperation of Platinum Advisor Marketing Strategies LLC. Securities offered through Cambridge Investment Research, a broker-dealer, member FINRA/SIPC. Ballenger is an investment adviser representative for Cambridge Investment Research Advisors Inc., a registered investment adviser. Centennial Capital Partners and Cambridge are not affiliated.