Weekly US Markets Update and OutlookU.S. stocks face employment, earnings tests
Jobs report, first-quarter earnings to bring crumbling fundamentals in focus
MarketWatch: Stocks will continue to test the market's newfound resilience next week, as investors look to close the first quarter and cast aside jitters from the credit crisis. However, concerns about the U.S. economy are likely to return amid a slew of key numbers culminating with the employment report Friday.
"Pretty much everybody expects a recession," said Sam Stovall, senior investment strategist at Standard & Poor's. "But with most people still forecasting a fairly mild recession, investors are keeping their fingers on the pulse of the economy." On Friday, the Dow Jones Industrial Average finished down 86 points to 12,216. The S&P 500 index shed 10 points to 1,315, while the Nasdaq Composite dropped 19 points to 2,261. Stocks had posted gains in the previous week, after the near collapse and subsequent bail-out of Bear Stearns -- which, together with massive interventions by the Federal Reserve -- seemed to put a floor under a market that has fallen sharply since last October.
But with investors now looking ahead to the end of the first quarter on Monday, money managers are scrambling to ditch under-performing stocks to buy better performing issues in order to embellish portfolios. "We're seeing end-of-quarter window dressing," said Paul Mendelsohn, chief investment strategist at Windham Financial Services. "People are getting out of some stocks and we saw that in Citigroup and other financials [Friday], with money flowing into other areas such as techs."
Quarterly pain
Shaken by the biggest credit crisis in decades, the market put in a dismal performance for the first quarter to date. There remains one trading session for the quarter.
With the start of a new month next week, investors will also start looking toward the first-quarter earnings season, and be on alert for possible profit warnings from companies struggling with the impact of the credit crisis and a slumping economy.
Latest : U.S. Treasury Secretary Henry Paulson is calling for extensive, wide-ranging reforms to the way the government regulates financial markets, including proposals to give the Federal Reserve more power and create new bodies to monitor mortgages and other transactions. He is schedule to provide more details on Monday morning.
Weekly KLSE Composite Index Update and Outlook
ICap: After being bearish for the first quarter of this year, its MACD is now mending gradually from a bearish mode, suggesting more recovery ahead. Looking at the steady growth path of the world economy, this trend look unlikely to end abruptly even if the US economy falters. Nevertheless, the KLSE still needs a lot more volume to enable it to race ahead impressively. It is coming.
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