Wall Street: After decent rally, perhaps time for a pause



REUTERS

Published — Sunday 17 February 2013

Last update 17 February 2013 6:20 am

| نسخة PDF Print News | A A

NEW YORK: US stocks could struggle to extend their seven-week winning streak as the quarterly earnings period draws to a close and the market bumps into strong technical resistance.
Many analysts say the market could spend the next few weeks consolidating gains that have lifted the benchmark Standard & Poor’s 500 by 6.6 percent since the start of the year.
The S&P 500 ended up 0.1 percent for the week, recovering from a late sell-off on Friday after a Bloomberg report about slow February sales at Wal-Mart triggered a slide in the retailer’s shares. It was the index’s seventh week of gains.
Odds of a pullback are increasing, with the market in slightly overbought territory, said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston.
“I do suspect the closing of the earnings season will lead to at least a pause and possibly a pullback,” Zaro said. The S&P 500 could shave 3 to 5 percent between now and early April, he said.
Fourth-quarter earnings have mostly beaten expectations. Year-over-year profit growth for S&P 500 companies is now estimated at 5.6 percent, up from a Jan. 1 forecast for 2.9 percent growth, and 70 percent of companies are exceeding analyst profit expectations, above the 62 percent long-term average, according to Thomson Reuters data.
On Thursday, Wal-Mart, the world’s largest retailer, is due to report results, unofficially closing out the earnings period. Investors will be keen to see its quarterly numbers, especially after the Friday’s news report that rattled investors.
The S&P 500 has gained 4.3 percent since Alcoa kicked off the earnings season on Jan. 8.
The approaching March 1 deadline for across-the-board federal budget cuts unless Congress reaches a compromise adds another reason for caution, especially with recent economic data indicating the recovery remains bumpy.
Manufacturing output fell 0.4 percent last month, the Federal Reserve said on Friday, but production in November and December was much stronger than previously thought.
The S&P 500 has been trading near five-year highs, and it notched its highest level since November 2007 this week. But the gains have pushed the benchmark index almost as far as it is likely to go in the near term, with strong resistance hovering around 1,525 and 1,540, one analyst said.
As a result, the index is set to move sideways, said Dave Chojnacki, market technician at Street One Financial in Huntington Valley, Pennsylvania. “We just don’t have the volume or the catalyst right now” to go above those levels, he said.
At the same time, other analysts say, the market has not shown significant signs of slowing, including a break below 15- and 30-day moving averages.
Such moves would be needed to show that momentum is slowing or that the market is at risk of a correction, said Todd Salamone, director of research for Schaeffer’s Investment Research in Cincinnati, Ohio. The S&P 500’s 14-day moving average is at 1,511 while the 30-day is at 1,494. The index closed Friday at 1,519.
Recent M&A activity, including news this week of a merger between American Airlines and US Airways Group, helped provide some strength for the market this week and optimism that more deals may be on the way.
In the coming days, the market will focus on minutes from the latest Federal Reserve meeting, due to be released on Wednesday, which could provide support if they suggest the Fed will remain on its current course of aggressive monetary easing.
The Fed minutes released in January spooked markets a bit when they revealed that some Fed officials thought it would be appropriate to consider ending asset purchases later in 2013. US Treasury yields rose on that news, though market worries about a near-term end to quantitative easing have since faded.
Among other companies expected to report earnings next week are Nordstrom, Hewlett-Packard and Marriott International.

What's happening around Saudi Arabia

Deputy Crown Prince Mohammed bin Salman bin Abdulaziz, the Second Deputy Prime Minister and Minister of Defense, on Thursday led the delegation of the Kingdom of Saudi Arabia taking part in the meeting of the international coalition countries to coun...
Munich: Minister of Foreign Affairs Adel bin Ahmed Al-Jubeir led the Saudi delegation to the meetings of the International Syria Support Group meetings, taking place here.The meetings, which have begun, in Vienna, exert efforts to find a political so...
Brigadier General Ahmad Al-Assiri, the Military Advisor to the Minister of Defense, asserted the Kingdom is ready to send ground troops to fight Daesh, as soon as the international coalition gives the green light, and that this decision of Saudi Arab...
JAZAN: Seven lives were snuffed out and several others sustained injuries as a gunman went on a killing spree in Al-Dair governorate of Jazan on Thursday. Employees at an education department office came under a hail of bullets resulting in casualtie...
RIYADH: The ongoing Janadriyah national heritage and culture festival welcomed German government representatives as the guests of honor, marking a new era in Saudi-German ties.Detlef Daues, chief executive officer of a German business group, said: “I...
RIYADH: Highlighting the importance of caring, preservation and better maintenance of mosques located along highways in the Kingdom, the Saudi Commission for Tourism and National Heritage (SCTNH) and the Masajedna Foundation will honor excellence in...
ABHA: Women graduates in Asir say they are looking for private companies to hire them for online jobs which can be done at home.They asked businessmen to open new production lines for women in both factories and banks.The women said that this would c...
ABHA: Deviant groups have attempted to attract Saudi women to carry out terrorist operations by various means and in sinister ways.Many women have been found to have been recruited by terrorist groups inside and outside the Kingdom.Islamic scholar Mo...
RIYADH: Makkah Gov. Prince Khaled Al-Faisal has written a patriotic poem to inspire Saudi troops at the southern borders.Titled, “I wish to be with you,” the poem infuses encouragement in the hearts and minds of troops guarding the borders in Najran,...
RIYADH: A delegation of senior officials from King Abdullah University for Science and Technology (KAUST) visited the King Abdullah City for Atomic and Renewable Energy (KACARE) to discuss cooperation between the two institutions on sustainable energ...
RIYADH: The Office of the Education Department in eastern Taif has launched a program called “Fatin” which aims to protect students from intellectual threats around them.Fahhad Al-Zuibi, director at the Office for Education said, “The program aims to...
RIYADH: The Taif theater group won two awards when it participated recently in the ninth edition of a theatrical festival in Bahrain. The group, which represented the Kingdom in the theatrical festival, mounted a play production titled “Out of Contro...
RIYADH: Riyadh Gov. Prince Faisal bin Bandar inaugurated the first festival for families with handicapped members at the King Fahd Cultural Center (KFCC) on Wednesday evening. The festival, which will last for three days, features a bazaar that displ...
RIYADH: A separate department to provide enhanced security to the Kingdom’s schools will be set up in all educational regions, Education Minister Ahmad Mohamed Al-Issa announced on Wednesday.Under the new directive, such departments will be establish...
RIYADH: Under a new ministerial ruling, payment of the minimum capital for industrial development is to be abolished.To support industrial development, the Ministry of Commerce and Industry issued a ministerial decree eliminating the requirement of t...

Stay Connected

Facebook