US Markets Update and OutlookU.S. stock indexes likely in for another wild ride
Is weekend bailout of Fannie Mae and Freddie Mac possible?
MarketWatch: U.S. stocks are likely facing another wild ride in the week ahead, with the underlying trends decidedly bearish following Friday's unemployment report that the jobless rate has spiked to 6.1%. "I think it's very hard in the very volatile environment we're in, to predict what is going to happen on any given day," said Edmund Hyland, managing director and global investment specialist at J.P. Morgan Chase Private Bank, a unit of J.P. Morgan Chase & Co. Equities investors seem to be lurching between "varying degrees of despair," said Hyland.
On Friday, U.S. stocks finished mostly higher, but posted steep weekly losses, as the market took in a big jump in the unemployment rate in August, which supported a bleak view of the economy. After falling nearly 150 points during the session, the Dow Jones Industrial Average ended up 32 points, or 0.3%, to end at 11,220, with the blue-chip index finishing the week with a loss of 2.8%, marking its fourth consecutive weekly fall. Year-to-date, the Dow industrials are down 15.41%. The S&P 500 dipped 5.4 points, or 04% to end at 1,242, while the Nasdaq Composite fell 3 points, or 0.1%, to end at 2,255. For the week, the S&P fell 3.2% and the Nasdaq shed 4.7%.
"In the third quarter, we had weak economic data pretty much across the board, so now investors are getting nervous about third-quarter earnings, and the balance sheet problems they (financial institutions) are facing," said Hyland. In a related development, the Wall Street Journal late Friday reported in its online edition that the Treasury Department is close to finalizing a plan to help shore up mortgage giants Fannie Mae and Freddie Mac, with the newspaper citing people familiar with the matter.
Crude connection
Crude-oil futures on Friday closed below $107 a barrel, with crude closing at $10.23 a barrel on the New York Mercantile Exchange. "One thing that should be helping consumers feel better, at least the ones that are still employed, is crude is down to $107 a barrel, that's significantly down from the top, but year over year, it's still up $30 or $40 a barrel," said Dave Dickens, executive vice president, asset/liability management, at U.S. Central Bank. With the stock market watching the price of crude more carefully in recent months, Tuesday's OPEC meeting should be a focus on coming days, with many market participants expecting the cartel to curb production. "The OPEC meeting is going to be crucial for the oil market. If they decide to cut production, then we could see a firming up of oil prices and we could see the Fed raising rates at the end of the first quarter," said Peter Cardillo, chief market economist at Avalon Partners.
Incoming data
The August rise in unemployment is congruent with an economy either in or close to a recession, and doesn't bode well for upcoming economic data, which in the week ahead includes housing data on Tuesday and import prices and trade deficit data on Thursday. Friday brings the producer price index and retail sales, with the recent drop in commodities expected to bring the PPI count down, although still high. "Retail sales growth should continue to weaken given the poor labor market backdrop and expensive energy, said William Knapp, investment strategist for MainStay Investments.
Darkest before the dawn?
When things are as broadly negative as they are now, it has historically been shown to be a good time invest, said Hyland. "Twelve months from now most likely equity markets will be higher than they are today, and two or three years from now we'll look back and this will have been a good time to put money to work," said Hyland. "We're most positive on U.S. large-cap stocks, and least positive on Europe, as their slowdown is just beginning," said Hyland. The global economic slowdown is among the factors clouding the equities market, as is the hotly contested U.S. presidential race, which is likely adding to the volatility currently roiling the stock market
KLSE CI Update and Outlook
ICapital: This week's I Capital updates the weekly KLSE CI. The KLCI has now retraced more than 61.8% with its weekly MACD and DMI bearish and the RSI hovering precariously close to the oversold territory. Though the KLCI reacted positively ahead of the Budget 2009 last Friday, the uncertain political climate is still dominating the fragile market. As the technical readings are not giving out any promising picture yet, continuous selling is likely to drag the KLCI to a lower support level of 1,050.
* Remember this face! Racism remarks yet again! Ahmad Ismail?? (labeled the Chinese in Malaysia as - penumpang (delete pendatang), Dr M (stroking racial tension again) ....... when can these people understand we as a nation cannot afford all these racists remarks anymore if we intend to achieve success together in this highly competitive world.
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