US investors gird for fresh market meldown in coming week
Pastor Dale Morgan
US investors gird for fresh market meldown in coming week*
NEW YORK (AFP) - - US investors are girding for fresh stock turmoil in
the coming week after riding a market roller-coaster in recent days,
which has shaken their confidence in the mortgage and credit markets.
The major US stock market indexes ended the week higher Friday that a
week ago, but investors saw their portfolios whiplashed as uncertainty
about the troubled US housing sector and a related credit squeeze swept
world markets.
The leading Dow Jones Industrial Average has dived and jumped by over
200 points in recent days, investors have fled mortgage related
investments, and the Federal Reserve has injected tens of billions of
dollars into the financial system to shore up confidence.
The blue-chip Dow gained 0.44 percent for the week to end Friday at
13,239.54, following a 0.63 percent decline in the prior week and an
over four percent drop in the week before that.
The broad-market Standard Poor's 500 rose a more substantial 1.44
percent over the week to 1,453.64.
The tech-rich Nasdaq composite increased 1.34 percent on the week to
Friday to finish lower at 2,544.89.
Despite the end-of-week gains, analysts said fresh Fed interventions
could be required in coming days if the markets display renewed
volatility and credit problems.
"Central banks are doing the right thing, they're adding liquidity to a
system that needs it and they will continue to do so until it doesn't
need it.
"It's part of the process to get out of the credit crunch and financial
turmoil," said Art Hogan, an analyst at Jefferies and Co.
The US central bank pumped 38 billion dollars into the financial system
on Friday in move which some analysts said helped bolster sentiment.
While much of the past week's focus was on the stock market and mortgage
and credit sectors, economic news is likely to grab more headlines in
coming days.
"Next week, it's all about the economy. We have a lot of economic news
coming out. If the economic news remains on the positive side, that
could alleviate some of the fears that the economy might be headed to
slower growth," said Peter Cardillo, an analyst at Avalon Partners.
Despite the market jitters, growth in the US economy accelerated to a
3.4 percent annualized pace in the second quarter, up from a 0.6 percent
crawl in the first three months of the year.
However, some economists believe the housing downturn, which started
over a year ago, and growing fears about the mortgage market could spill
over into the wider economy.
A government report on housing starts next Thursday will likely
stimulate interest.
Most economists expect housing starts to slow to 1.41 million in July
compared with 1.47 million in the prior month as homebuilders cut back
on new developments.
Investors will get an update on retail sales Monday with most analysts
anticipating a rebound in activity. Sales are forecast to rise 0.2
percent in July compared with a 0.9 percent decline in the prior month.
Such a rebound, or a stronger than expected report, would likely help
restore some confidence, market watchers said.
They also warned that further trading dips could lay ahead.
"As we have been saying for the last month, keep your seat belts and
shoulder harnesses fastened. The ride will remain rough," said Frederic
Dickson, an equity analyst at DA Davidson.
Bond prices fell in the week to Friday.
The yield on the 10-year US Treasury bond rose to 4.776 percent from
4.700 percent a week earlier. The 30-year bond yield jumped to 5.005
percent from 4.867 percent. Bond yields and prices move in opposite
directions.