Weekly US markets Update and OutlookStocks turn to earnings as recovery hopes slip
Marketwatch: Investors will get their first taste next week of what's expected to be a gruesome earnings season, with a double helping of sour 2009 outlooks and even more evidence of the depth of the recession.
"There's disappointment about the prospect of the recovery," said Ken Tower, market strategist at Quantitative Analysis Services. "Earnings are now more likely to disappoint, and across the board, [companies] are slashing estimates going forward." Stocks fell on Friday, and posted steep losses for the week, after the government said the U.S. economy lost another 524,000 jobs in December, and the unemployment rate rose to 7.2%, confirming 2007 as the worst for the labor market since World War II.
The current market consensus is for the U.S. recession to bottom out sometime in the middle of this year -- but the latest signs from the labor market suggested to many that these forecasts might be too optimistic.
"I think that people are too optimistic about the recovery," Tower said. "A lot of bad news is already priced in but every time you get worse than expected news, the stock market will have to adjust." On Friday, the Dow Jones Industrial Average finished at 8,599.18, down 143.28 points, or 1.6%, for the session. For the week, the blue-chip average posted a loss of 4.8%. The S&P 500 lost 19.38 points, or 2.1%, to finish at 890.35, with the broad index losing 4.5% for the week. The Nasdaq Composite shed 45.42 points, or 2.8%, to stand at 1,571.59 Friday, leaving it down 3.7% from last Friday's close.
President-elect Barack Obama told a news conference on Capitol Hill the jobs report underlined the need for quick action on his proposed economic stimulus proposal.
"The new Obama Administration has been very quick to market their roughly $750 billion two-year stimulus package in the hopes of speedy implementation after the January 20 inauguration," said Sherry Cooper, chief economist at BMO Capital Markets.
"Even so, it appears that the squabbling on Capitol Hill will stall early passage, at least for a while," she said.
Next week, investors will key in to more economic data, especially the December retail sales numbers due out on Wednesday, and the Federal Reserve's Beige Book of economic conditions, released on the same day.
According to Marc Pado, market strategist at Cantor Fitzgerald, the stocks in the retail sector bear watching as they have shown signs of life over the past week, even after most retailers posted scary same-store sales numbers.
Earnings
In the quarterly reporting season that gets its unofficial start Monday, analysts polled by FactSet anticipate earnings for S&P 500 companies fell 12%, dragged down by double-digit drops in auto, retail and materials companies. Alcoa Inc., which kicks off the unofficial start of reporting season after the close of trading Monday, earlier this week said it planned to cut 13,500 jobs, close plants and chop capital spending by 50%. Intel Corp., another blue-chip stock often used as a barometer for both the tech sector and the economy, will report earnings on Thursday.
Weekly KLSE CI Update and Outlook
ICapital: The KLSE CI is above its 30-day and 50-day but below its 50-week moving averages. Its daily MACD and DMI are bullish. On weekly KLSE CI. The stock market had one of its worst years ever in 2008, with the KLCI falling 39.3%. However, the KLCI has actually been quietly attempting to build a base in the past couple of months from which a bottom may form with the 800-mark acting as support. Would the volume that picked up substantially amidst the New Year rally be a precursor to a new sustained bull market?
* Beware of fake RMB ..esp...RMB100 notes.
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* I am feeling worried....TheStar: Government departments ordered to drop austerity measures.
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