Wall Street enters a new quarter tomorrow after a roller-coaster performance in the first three months of this year, with investors cautious amid mixed economic signals and an ambiguous posture from the US Federal Reserve.
Over the past week, the market lost some ground and closed out a volatile first quarter of trading little changed.
The Dow Jones Industrial Average of 30 blue chips shed 1.01 percent in the week to close Friday at 12,354.35.
The broad-market Standard & Poor's 500 index lost 1.06 percent to 1,420.86 and the tech-dominated NASDAQ composite dropped 1.4 percent to 2,421.64.
For the first quarter, the Dow is off 0.87 percent while the S&P has gained a scant 0.18 percent and the NASDAQ is up 0.26 percent.
Still, the market had a rocky opening to the year with strong gains in January erased by a big selloff the following month, and a modest recovery in March.
Dick Green at Briefing.com urged investors to avoid getting caught up in the swings of the market.
"We are moderately bullish and cautious and have remained so through the volatility of recent months," he said.
"The fundamentals right now are mixed to moderately bullish: nothing exciting, but nothing scary either. The interest rate outlook is stable and the economic outlook calls for modest growth. Earnings growth is slowing, but still positive," Green said.
Over the past week, the market showed a negative reaction to US Federal Reserve Chairman Ben Bernanke, who appeared to dash hopes for an early cut in interest rates despite the market's interpretation of a shift in bias in the March 21 policy statement.
Bernanke reiterated that he saw a "moderate" growth track for this year and that inflation was his predominant concern. But he also said the outlook was subject to a number of "uncertainties" and was not sure how the slump in housing will play out.
"Chairman Bernanke signaled that his outlook remains steady, but the soggy data flow has increased our concern over the near-term growth picture," said John Shin, analyst at Lehman Brothers.
Fred Dickson, market strategist at DA Davidson, said the economy is strong enough to keep the stock market on track at least for modest gains.
"We expect our economy to ride on the coattails of a robust global economic expansion that should offset the fallout from the big recession in the housing market," Dickson said.
"We continue to get evidence of steady growth in consumer income and consumer spending although business investment spending has slowed significantly over the last two quarters. Continuing merger and acquisition activity should provide a halo effect over the US stock market as corporate acquirers continue to deploy their monstrous war chest of funds estimated to be in excess of US$1 trillion," he said.
Art Hogan, analyst at Jefferies and Co, said the market has been able to handle negative news out of Iran and a spike in oil prices.
Over the coming week, he said, "we'll keep an eye on the energy prices. It could be seen as positive for the market if they are going down."
Additionally, he said a key report would come in the monthly nonfarm payrolls report on Friday, seen as one of the best indicators of economic momentum.
"I think the market will go higher if we focus on the fundamentals, which are good," Hogan added.
Bond prices fell as inflation concerns came back to forefront.
The yield on the 10-year Treasury bond rose to 4.648 percent from 4.613 percent a week earlier and the 30-year bond yield climbed to 4.848 percent against 4.799 percent. Bond yields and prices move in opposite directions.
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