Marc Pado Comments: Market Snapsht: US Stock Market Facing Tough Data, Tough Month
August 29, 2010, AutomatedTrader.net
The coming week brings more difficult economic reports and the start of September, historically a challenging month for the stock market.
"Everyone is willing to twiddle their thumbs through September, a difficult time because of how far we are from third-quarter earnings and the elections," said Marc Pado, U.S. market strategist at Cantor Fitzgerald.
"The degree of the market's oversold level will be tested (in the week ahead) by what should be a flow of cool economic news," said Nick Kalivas, an analyst at MF Global.
Bullish investors will start the week with some wind in their sails. On Friday stocks bounced back from seven-week lows helped by a report showing economic growth slowed less than feared in the second quarter, and by Federal Reserve Chairman Ben Bernanke's promise to protect the recovery.
The Dow Jones Industrial Average (DJI) gained 164.84 points, or 1.7%, to end Friday at 10,150.65 For the week the blue-chip index was off 0.6%.
All but one of the Dow's 30 components finished with gains on Friday, including Intel Corp. (INTC), up 1.1% after the computer-chip maker cut its sales forecast.
"Friday's rally in the face of bearish news from Intel highlights the oversold nature of the trade," noted Kalivas.
The sole decliner among the blue chips proved to be Hewlett-Packard Co. (HPQ), with shares of the tech giant declining after it raised its offer for 3Par Inc. (PAR) to $2 billion, once more beating Dell Inc.'s (DELL) offer for the data-storage company.
The S&P 500 Index (SPX) rose 17.37 points, or 1.7%, to finish at 1,064.59, trimming its third consecutive weekly drop to 0.7%.
The Nasdaq Composite Index (RIXF) added 34.94 points, or 1.7%, to 2,153.63, leaving it with a weekly loss of 1.6%.
Friday's gains came after the government estimated the U.S. economy grew 1.6% in the second quarter, with the higher-than-expected GDP number coming on a rise in personal consumption.
"That's a real relief because the consumer is what everyone is worried about. It builds a case for maybe things aren't as bad as you think," said Pado.
And, speaking to the Federal Reserve's annual summer policy retreat in Jackson Hole, Bernanke refuted the notion that the central bank was out of bullets and declared he would not allow the economy to fall into deflation.
