NEW YORK (Reuters) - head of investors in this week on the defensive as the potential of U.S. equity gains could be limited, even if earnings are starting on a high note.
The first results of the fourth quarter will set the tone. Any weakness will give marketers a reason to withdraw from the manifestation of recent weeks, which blocked Friday on stock Bank losses and poor jobs data.
Still, the major indices finished with a week of gains sixth line last week: is 0.8 percent increase of index Dow Jones, S & P 500 1.1 percent and the Nasdaq composite index ahead 1.9 per cent.
Alcoa Inc. (AA).(N) set to release results Monday after the close of the market, informally is the launch of quarterly earnings season. Intel Corp. (INTC.)(O) and JPMorgan Chase & Co (JPM).(N), also the Dow components issue even card report for the week and are supposed to do.
"It will be important to get out of the box with a positive note," said James Dunigan, that allows to manage $ 105 billion in the PNC Wealth Management in Philadelphia. "If this is the case, we have a way just to run and can keep rising, but if results disappoint there is reason to take back."
S & P 500 (.)(SPX) reached 7% since the beginning of December, while Alcoa has soared 25 percent and JPMorgan jumped 16 per cent. Analysts say that these rapid gains leave vulnerable market for withdrawal and may limit to the potential.
GOOD, BAD AND UGLY
The S & P 500 struggled to break above 1280, although that a floor appears to grow to 1 260, the moving average of 14 days and near 2010 close.
Jeffrey Friedman, a market strategist Lind-Waldock in Chicago, said if the results exceed online or missing expectations "we might see as long as a withdrawal of 8 per cent". Potential upside is 4 to 5 percent "and only if earnings beat convincingly," he said.
Friday December employment report could increase the likelihood that stocks decline. While the unemployment rate declined amount of heavy in December, far fewer workers have been added than expected.
"It's good, bad and ugly in this report, said Friedman." Property is the unemployment rate, bad was that we did not meet expectations, and ugliness is that we do not know whether good or bad is more right. »
This week will also see the Friday retail sales data which will be closely watched soft suite comparable sales in December. On Wednesday, the Federal Reserve will release the Beige Book.
Book Beige, an anecdotal report about the economy, by region, just after the Chairman Ben Bernanke gave his first testimony to Congress since the launch of a second series of quantitative easing. Bernanke said Friday that the economy may be hitting his stride even if growth remains too low to make a real dent in U.S. unemployment situation.
Bank stocks could put pressure on more this week after a high court Massachusetts decision that invalidated the seizure of two houses in foreclosure by Wells Fargo & Co (WFC).(N) and U.S. Bancorp (USB).(N).
The index of the banks of the Army (.)(BKX) is an increase of 18% since the beginning of December, but fell by 0.9% Friday.
The decision may be seized nationwide Bank and "dampen the prospects for recovery for the real estate sector and banks," said Nick Kalivas, a senior analyst in equity index MF Global in Chicago. "Financials have really been a leader on the market in recent weeks." This could close this sector. »
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