WALL STREET WEEK AHEAD
AFTER ugly economic data and an unexpected downturn in sentiment on quarterly earnings, Wall Street will face a tough time battling back from the latest sell-off.
Technology and banking results will once again shape investor mind-set in a week dominated by a blitz of quarterly earnings.
But it will be a tough job to shift back into a positive mode after stocks dropped nearly 3 per cent on Friday.
Minutes of the Federal Reserve’s June meeting got the market seriously worried last week after officials said they were more concerned with the pace of the economic recovery.
A raft of disappointing data on consumer sentiment and factory activity did not help, prompting questions last week on whether the economy had merely hit a soft patch or was primed for a double-dip recession.
“It doesn’t mean the market can’t rally, but the structural problems are there and there is no doubt about it,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
From a technical perspective, the picture is even less certain. The Standard & Poor’s 500 Index is stuck in a tight range after it failed to hold its 50-day moving average, now near 1,090, after closing above it for two days. The Nasdaq Composite, meanwhile, failed in its attempt to break its 200-day moving average, but has support around its 14-day moving average at 2,171.
For the past week, the Dow Jones industrial average lost 1 per cent, while the S&P 500 slid 1.2 per cent and the Nasdaq shed 0.8 per cent.
This week’s earnings will include results from 12 Dow components, as well as quarterly scorecards from financial powerhouses Goldman Sachs Group and Morgan Stanley, along with tech bellwethers Apple, Texas Instruments and Qualcomm.
For the second quarter, earnings are expected to increase 28 per cent from the year-ago period, according to data.