HERE’S WHAT I GOTTA SAY…
- After a two-week advance, stocks are just shy of crossing into positive territory for 2010, but the week ahead brings hurdles that could challenge the momentum.
- The economy is in recovery mode, but it doesn’t feel like it for most people – Add to that the issues being debated in Washington, ongoing questions about China and Greece and when the Fed might start to raise rates, and you’re bound to see a volatile market.
- A bevy of reports on the housing market, employment and GDP growth are due this week. Federal Reserve Chairman Ben Bernanke heads to Capitol Hill to testify on the state of the economy and monetary policy.
- Also in Washington, lawmakers meet to debate the Toyota recall, the Treasury budget, bank health and whether more stimulus is needed.
- Meanwhile investors are still looking at a broad market that is roughly 64% above 12-year lows lows hit in March 2009.
Selling peters out:
- Four weeks of declining markets were followed by two weeks of gains as the panic about China and Greece’s debt crisis spreading to the rest of Europe began to dissipate.
- The S&P 500 plunged 9.2% between January 2010 highs and early February lows, a loss that was shy of the technical definition of a correction, but sufficient to bring in some buyers.
- But with the Dow, Nasdaq and S&P 500 all hovering just below where they ended last year, investors may be reluctant to push stocks much higher, particularly with concerns about unemployment, the U.S. deficit, inflation and Fed policy in play.
- I see stocks in a trading range for the rest of the first half – I think fears of inflation are well founded and they will cap the market, but the Fed will do what it can to make sure the economy doesn’t dip, so you’re left with a trading range.
