Weekly US markets update and outlookStocks pin hopes on rescue plans
Market rallies past dismal jobs numbers, with sights set on possible recovery
。
MarketWatch: Investors are poised to start next week eager for plans from the government to boost the economy and rescue the financial system, which could help bulls cement a nascent February rally in stocks. Hopes that the market has already priced in much of a dismal outlook for the economy this year were also evident Friday, as stocks rallied past news that January saw the biggest loss of jobs since 1974.
"The market is possibly looking at what we see today and thinking that we can't get much worse than that," said Paul Nolte, director of investments at Hinsdale's Associates. "It's not yet expecting that things will get better, but at least not much worse." On Friday, the Dow Jones Industrial Average jumped 217 points, or 2.7%, to end at 8,280. The S&P gained 22 points, or 2.7%, to 868, while the Nasdaq Composite rallied 45 points, or 2.9%, to 1,591. After posting their worst January performance on record, stocks entered the month of February on a positive note. For the week, the Dow rose 3.5%, the S&P gained 5.2%, and the Nasdaq jumped 7.8%.
Part of the rally was supported by hopes that the Obama administration's economic stimulus plan was close to being passed by Congress. Late Friday, senators reached a tentative deal on a $780 billion plan, clearing the way for a vote over the weekend.
And on Monday, Treasury Secretary Timothy Geithner is expected to unveil the administration's plans to rescue ailing banks and hopefully tamp down the credit crisis that has crippled the financial system and the global economy the past year and a half.
While outlines of the plan remain sketchy, many holders of financial stocks fear that potential moves to nationalize banks could reduce their stake or wipe them out altogether. "There remains an outside chance the federal government could move to nationalize the banks or commit additional capital and thus require banks to halt interest payments on preferred shares or at the very least, dilute existing equity shareholders," said Robert Pavlik, market strategist at Oaktree Asset Management. Yet, absent of the exact details of the Treasury's prescription for change, financial shares still rallied over the past week on Wall Street, a bullish sign for the market, according to Pavlik. "The market's turnaround on a lack of concrete news is interesting," he said. "We believe it points to the hope that the Street has that investor optimism will once again return to the levels we saw back in November."
Depressed earnings
The market also seemed not overly concerned about weaker-than-expected earnings and even some drastically weaker outlooks from companies posting their quarterly results. With 309 companies from the S&P 500 having now reported, fourth-quarter earnings are expected to have slumped more than 40% from the year-ago period. This would mark the weakest growth rate since at least 1998, according to Thomson Financial, which began tracking the data that year. Just a week ago, earnings were expected to have fallen 35% in the quarter.
The outlook for the rest of the year has also weakened, with a drop of more than 28% now expected for the first quarter, a roughly 25% decline in the second quarter, followed by a drop of 10% in the third quarter. Most forecasters still expect modest growth for the fourth quarter. But that view currently seems in jeopardy, warns John Butters, earnings analyst at Thomson.
Next week, another 60 companies from the S&P 500 are expected to report, including one Dow component, Coca-Cola Co. on Thursday.
Economic blues
Next week will be light on economic reports, except on Thursday, when the government will report its January tally of retail sales. Dismal sales and outlook from U.S. retailers failed to prevent those stocks from rallying last week, as investors had already priced in very bad numbers. On Tuesday, Federal Reserve Chairman Ben Bernanke is expected to testify on the central bank's lending programs to ailing financial institutions. That same day, wholesale inventories and sales data for December are due. On Wednesday, the government will report trade data for December.
Weekly KLSE Update and Outlook
MarketWatch(TheStarBizWeek): Bursa Malaysia's principal index retraced from the recent high of 936.63 on January 7 to a low of 867.35 on January 23 in an apparent profit-taking activity before turning range-bound on consolidation.
According to the chart, the CI has been trapped within a moderate band. It will continue to trade in this way until a clear breakout or a breakdown is detected, with many investors adopting a cautious stance while volume stays low due to prevailing uncertainty.
Initial resistance is pegged at the 900-point mark, followed by the 100-day SMA of 914. A successful push above the recent peak of 936.63 will see the market experiencing greater volatility to the upside.
Important support is set at the 860-863 point band. If it is violated, the next lower floor of 835 points and the recent bottom of 801.27 will be become much weaker. Overall, the technical landscape is unclear but a slight improvement in the short term indicators suggest share may have a mild upward bias initially before pulling back later.
* It is steaming hot today isn't it? In Australia, the hot weather has caused the worst fire disaster in a quarter century and the death toll has now reached 84.
。
* Australia's latest GDP estimates: 2009 : 0.5%, 2010: 2.5%
* IMF: China has potential to maintain 8% growth this year.
* Bloomberg: Japan won't print new currency to help stimulate the economy.
* RTTNews: Japan's foreign exchange reserves for January is USD1.011T(Dec USD1.631T)
No comments:
Post a Comment