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Sun, Apr 12, 2009 - Page 10 News List

Wall Street cautious after five-week gain

AFP , NEW YORK AND WASHINGTON

US stocks have staged five consecutive weeks of gains, but analysts asked investors to brace for a tough ride as earnings results of key recession-battered companies emerge in the coming weeks.

Shares ended the holiday-­shortened week on a high note with the blue chip Dow index posting a stunning three-digit gain on Thursday on the back of projections by banking giant Wells Fargo of a record first-quarter profit.

Friday was a market holiday.

The Dow Jones Industrial Average rose 0.82 percent to finish the week at 8,083.38, its highest closing level in two months.

The Dow’s fifth weekly gain is the best performance since fall 2007.

The broad Standard & Poor’s 500 index rose 1.67 percent to 856.56 over the week, while the tech-heavy NASDAQ was up 1.89 percent to 1,652.54.

The corporate earnings reporting season for the first quarter began on Tuesday with US aluminum giant Alcoa declaring a hefty US$497 million net loss on plunging prices for the key metal amid the global economic downturn.

Its second consecutive quarterly loss was higher than expected by most analysts and underscored the depth of the 16-month-old US recession flooding listed companies with red ink.

Following Alcoa’s result, the markets turned cautious on light trading ahead of financial results of other key companies, including financial institutions such as Citigroup, JPMorgan Chase and Goldman Sachs the coming week.

But Wells Fargo, scheduled to announce its results on April 22, made a surprise announcement on Thursday that it expected a “record” net income of some US$3 billion for the first quarter, trouncing Wall Street estimates and sparking a rally before market closed the week.

The US budget deficit accelerated last month to hit a record nearly US$1 trillion just halfway through the current fiscal year, as the US government moved to bail out troubled institutions, government data showed on Friday.

The deficit for the first six months of the fiscal year which began on Oct. 1 was US$956.8 billion, according to the Treasury’s monthly statement of receipts and outlays.

Receipts during the six-month period to last month were US$989.83 billion, while outlays amounted to nearly US$1.95 trillion, the data showed.

Last month’s US deficit of US$192.27 billion was higher than the US$160 billion expected by most analysts, coming on the back of money poured by US President Barack Obama’s administration to rescue financial institutions.

All six months of the fiscal year so far recorded red ink. The last time the US plunged into a consecutive six month deficit was during the October 2003 to March 2004 period, officials said.

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