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US markets may continue to the merger fuelled rally and delaying correction
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I think a strong correction is due to coming weeks.However excess liquidity and mergers are delaying the correction. Obviously Greenspan China warning and US interest rate worries were not enough to cool the stock market.So this week, we might have a uppker stock market.Wall Street's merger-fueled rally may continue this week, so long as Friday's payrolls report and other economic news don't spoil the party.This week will be very volatile with a lot of economic numbers.
For a holiday-shortened four-day work week, the calendar is crowded with reports on consumer confidence and the overall pace of economic growth, among others.
U.S. financial markets will be closed on Monday in observance of the Memorial Day holiday.
Economists surveyed by Reuters estimate that 130,000 nonfarm payroll jobs were created in May, up from 88,000 in April. The jobless rate is expected to remain unchanged at 4.5 percent.
The April increase in payrolls was the smallest in more than two years. If May shows some improvement, as expected, investors may be encouraged to keep pumping money into stocks.It will be very volatile with a lot of economic numbers.
Mergers and acquisitions along with record share buybacks and stronger-than-expected first-quarter earnings have helped fuel an equity rally this spring. The blue-chip Dow Jones industrial average topped 13,000 for the first time in late April, climbed above 13,500 for the first time in mid-May, and closed on May 18 at a record 13,556.53.
Last week, the Dow set a lifetime high of 13,624.55 on Thursday before closing sharply lower on interest-rate worries.
Last Monday, the Standard & Poor's 500 index rose above its record closing high for the first time in seven years and flirted with crossing that milestone for most of the week. But the S&P 500 repeatedly failed to hold its gains by the closing bell to set a fresh record.
Last week, though, some nervousness took hold in the market after former Federal Reserve Chairman Alan Greenspan warned on Wednesday that he feared a "dramatic contraction" in China's stock market. Greenspan, speaking via teleconference to a meeting in Madrid, said China's stock market boom was "clearly unsustainable." That pushed stocks lower on Wednesday. Greenspan's remarks gave investors a flashback to the huge global equity sell-off on February 27, which was triggered by the sharpest drop in China's main stock index in almost a decade.
On Thursday, the selling continued, with the Nasdaq losing 1.5 percent, as bond yields hit their highest levels since January after a surprising jump in new home sales made a rate cut this year look less likely and Network Appliance Inc. gave a weaker revenue forecast.
Higher oil prices also weighed on the stock market last week, with U.S. crude above $66 a barrel at one point.
By Friday's close, both the Dow and the S&P 500 had broken a seven-week winning streak.
For the past week, the Dow Jones industrial average fell 0.36 percent and the broad Standard & Poor's 500 index declined 0.46 percent. The Nasdaq Composite Index dipped 0.05 percent.
So far this year, though, the Dow is up 8.4 percent, the S&P 500 is up 6.9 percent and the Nasdaq is up 5.9 percent.
As U.S. markets open Tuesday morning after a long weekend, investors will be greeted by the monthly report from The Conference Board on its index of consumer confidence. The consensus calls for an increase to 105.0 in May from 104.0 from April, according to economists surveyed by Reuters. The April number was the lowest since last August, with that month's decline blamed on rising gasoline prices.
Revised data on the health of the U.S. economy in the first quarter will be released on Thursday. After the initial report of growth at a tepid annual pace of 1.3 percent, the median estimate for the revision has the growth rate even lower at 0.8 percent.
The GDP data includes the core personal consumption expenditures prices index, or core PCE prices index, an inflation gauge that is carefully monitored by the Federal Reserve. The revised data is not expected to show any change from the initial report of a 2.2 percent increase on a year-over-year basis.
Thursday also brings a report on Midwest business conditions from the National Association of Purchasing Management-Chicago. The consensus is that the Chicago PMI index will rise to 54.0 in May from 52.9 in April.
Excess liquidity in the financial system can keep stocks moving higher despite skeptics who are looking for a correction or a bear market.There is an enormous amount of cash on the sidelines.
In addition to the payrolls report, Friday's calendar includes reports on personal income and consumer spending for April. Personal income is estimated to have increased 0.3 percent after a rise of 0.7 percent in March. Spending is expected to rise 0.4 percent, slightly better than 0.3 percent in March.
The Institute for Supply Management's survey of May manufacturing activity is also due on Friday. The ISM report is expected to show a reading of 54.0, down from 54.7 a month earlier.
Friday will also see an update to the Reuters/University of Michigan U.S. consumer sentiment reading for May. The initial report was a reading of 88.7, which was an improvement from 87.1 at the end of April. The Reuters forecast calls for a final May reading of 88.0.
Quarterly earnings reports will be few in number. Among the better-known companies due to release results are Costco Wholesale Corp., Dell Inc., , H.J. Heinz Co and Sears Holdings Corp all set for Thursday. |
| Tarih
: 28.05.2007 |
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© 2006 Mert TOKER All Rights Reserved. |
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