Weekly US Markets Update and OutlookStocks to cut their apron strings with Washington
Wal-Mart, economic data to dominate; bad-bank plan could still make waves
MarketWatch: U.S. stocks, at the beck and call of Capitol Hill in the past month, get a chance to cut those ties in the week ahead, as Congress heads home and a smattering of corporate and economic releases take over the calendar.
During a holiday-shortened week, earnings from Wal-Mart Stores Inc. and Deere & Co. round out a quarterly reporting season notable for the gallons of spilled red ink.
Investors on watch for early signs of an economic turnaround also will wade through two economic surveys on how business and the housing market are faring this month, plus January's industrial activity and inflation.
"Everyone knows that the economy is weak, but the consensus is that the economy will bottom in the summer," said Alec Young, equity strategist for Standard & Poor's equity research unit. "If you see the numbers miss, it makes it harder for investors to believe things will get better."
News out of the Beltway could still wreak havoc across traders' screens when they return from the President's Day holiday weekend Tuesday. U.S. Treasury Secretary Timothy Geithner could fill in the details of his recently announced plan to partner with private investors to wipe the bad assets off banks' books. Stocks sold off sharply in the past week, after analysts said the plan fell short of the needed fix for the beleaguered banking system.
Geithner has yet to detail how much the government will pay to take bad loans and securities off the balance sheet of banks. Too low a price for these illiquid assets would likely cause some banks to take a fresh round of charges, further pushing off a recovery in the financial system. "There will be a lot of speculation as to whether Geithner comes out with the details," said Greg Valliere, senior political strategist at Stanford Financial Group in Washington, D.C.
The Treasury or the FDIC could reveal how it plans to value toxic mortgage-related assets by rescuing a struggling financial institution, according to analysts.
For weeks, mixed sentiment about the progress of a second economic-stimulus package and the Treasury's bank plan has teased the benchmark indexes.
Optimism over both underwrote a rally in stocks during the first week of February. But the S&P 500 Index and Dow Jones Industrial Average gave back most of those gains in the past week, making spectacular intraday dives on Tuesday and Thursday, on disappointments that both programs would fall short.
The S&P 500 and the Dow both lost about 5% for the week ended Feb. 13.
Stock investors shut the door on one source of that volatility Friday, when Congress prepared to push through a sprawling, $787 billion stimulus package backed by President Barack Obama. He is expected to sign the bill into law on Monday. "It's going to be a quiet week because Congress is out," Valliere added.
Legislators heading home for the President's Day holiday typically take the week off to spend time with voters and donors.
Future news about the stimulus will involve details of its implementation, such as how "shovel-ready" infrastructure projects are and when certain tax changes will go into effect, Valliere pointed out. But for now, distraction from that legislation is likely to give ground to reports from the economy and corporations.
Wal-Mart, inflation
The world's largest retailer is expected Tuesday to report a lower profit for its fiscal fourth-quarter, hurt by higher expenses and a stronger dollar. Analysts expect Wal-Mart will earn 98 cents a share, excluding a charge from class-action lawsuits. Reports from retailers J.C. Penney Co. and Lowe's Co. follow later in the week.
Companies are closing the books on an earnings season that has made records for its dismal performance.
Reported earnings, which include one-time gains and charges, in the S&P 500 have lost $10.44 a share in the fourth quarter -- the first time companies in the index have ever posted a collective loss. Operating earnings are on track for the six straight quarterly decline. Companies have been struggling to project future quarters as the economy founders.
On Tuesday, surveys from New York area manufacturers and the National Association of Home Builders give traders a taste of how factories and the real-estate sector have been faring this month.
On Wednesday, the January industrial output report is likely to show widespread declines in U.S. manufacturing, particularly pressured by lower auto production. Housing starts, also out Wednesday, likely slid to a new all-time low. Also Wednesday, the Fed releases minutes from its last meeting and its economic projections.
The week ends with reports on January wholesale and consumer prices. Both indexes are expected to reflect slightly higher gasoline prices since December while continuing to underscore the risk of deflation. Most key economic data this week "will contribute further evidence to the decay in economic growth in this quarter," wrote Brian Fabbri, chief economist for North America at BNP Paribas, in emailed comments Friday.
Weekly KLCI Update and Outlook
StarBizWeek(MarketWatch): Despite overseas markets, especially the Dow experiencing great swing and volatility, trading on the local bourse was pretty stable, with the key index fluctuating sideways to marginally higher, catching many people by surprised.
According to the weekly chart, a positive development appears in the making. That is, the key index had penetrated the 21-week simple moving average for the first time in 12 months. Theoretically, the breakthrough would pave the way for more scaling but because the CI still is flirting around the breakout level, it is wise we seek further confirmation before everyone turns bullish again.
Technically, the uptick of the daily and weekly MACDs suggest Bursa Malaysia may firm gradually this week.
To the upside, the key index is expected to face resistance at 925 points, 936.63 points, 946-950 points, 963 points and the 970-973 point range.
Support is seen at 886-892 point range, followed by 860-863 points band and the next at 835 points.
* Xinhua: South Korea Exchange plans to sign an official agreement with the Cambodian government next week to launch the kingdom's proposed stock exchange market in December. More fresh blood to spill? .
No comments:
Post a Comment