Sun, Nov 04, 2012 page15

• US markets steady after storm lashing

  WARY: October’s positive job report was overshadowed by the impact of Hurricane Sandy, while nervous investors await the outcome of Tuesday’s presidential election

  • AFP, NEW YORK
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  US stocks managed to hold steady in a week that saw the US financial markets shuttered entirely for the first time since the Sept. 11 attacks due to the devastating superstorm Sandy.

  However, traders were also on edge for the coming presidential election on Tuesday, with the race between US President Barack Obama and challenger Mitt Romney — who promises a different future for the finance industry — too close to call.

  The first weather-forced two-day closure on Wall Street since the Great Blizzard of 1888 came as Sandy flooded the lower reaches of Manhattan, halted east coast transportation and left millions powerless, including some of the world’s most powerful banks, investment managers and brokerages.

  Trade came back up on Wall Street on Wednesday, but many traders were still hobbled by the power shortages and telecommunications problems.

  With quarterly results still coming in largely showing slowing gains, the S&P 500 ended the week up a bare 0.2 percent from the previous Friday, at 1,414.20.

  The narrower Dow Jones Industrial Average of 30 blue chips was down 0.1 percent at 13,093.16, and the NASDAQ Composite gave up 0.2 percent to 2,982.13.

  The heavy effects of Sandy — with total losses estimated to hit US$50 billion and insured losses that could reach US$20 billion — offset the impact of a positive jobs report for last month released on Friday.

  While the jobless rate ticked upward slightly to 7.9 percent, the number of new jobs created jumped to 171,000, sustaining a moderate pace.

  The numbers gave an initial upward push to the market, but it fell back into negative territory.

  Some took that to raise the question of whether the US Federal Reserve could cut short its ultra-low rate policy sooner than expected, a bearish sign for stocks.

  “As welcome as these numbers are, they aren’t strong enough to deter the Fed from expanding QE3 [third round of quantitative easing] next year to offset the expiration of Operation Twist,” Nigel Gault and Paul Edelstein of IHS Global Insight said.

  At any rate, the election loomed over everything, another reason stocks moved sideways.

  “Perhaps markets are wary of being fooled by distorted year-end jobs numbers again ... Or perhaps markets are holding their breath ahead of the elections like everyone else,” the IHS Global Insight economists said.

  “Either outcome could provide a ‘certainty’ dividend for markets looking for clarity, though a Romney win might be cheered more forcefully,” they said.

  Post-election will bring the fiscal cliff battle, with the Democrats and Republicans fighting over how to right the budget deficit without forcing the country into recession, a distinct possibility if they fail to reach a compromise before Dec. 31.

  At the same time, it opens the holiday shopping season, which can be boon or bust for many retailers and their share prices. Forecasts are for healthy growth, but not better than last year’s.

  “It is that time of year again, as consumers gear up to head to the stores for the holiday shopping season,” Wells Fargo Securities said.

  “We estimate holiday retail sales will post a modest rise of 3.8 percent year over year, an increase in sales, but off last year’s 5.7 percent growth pace,” it said.

  “Several factors that will likely hold back consumer spending this year, along with slow personal income growth, include increased economic uncertainty and the impending fiscal cliff of government budget cuts and tax increases slated to go into effect in January,” it said.
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