Sun, Mar 11, 2012 page10

• US stocks mixed in rocky week

  REVERSE PSYCHOLOGY: One expert said the lack of an expected US economic slowdown had encouraged investors, despite high unemployment and a still weak housing market

  • AFP, NEW YORK
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  US stocks took a roller-coaster ride in the week to Friday as Wall Street marked three years since hitting bottom in the middle of the Great Recession.

  The week, a bumpy one due to worries about the Greek rescue plan, ended relatively flat for the key US indices.

  However, overall they looked in good shape, up solidly since the beginning of the year and far beyond the dark days of early March 2009, when the Dow Jones Industrial Average was at the 6,600 level and the S&P 500 was near 680.

  For the week to Friday, the Dow edged down 0.43 percent to 12,922.02, while the S&P rose 0.09 percent to 1,370.87.

  Meanwhile, the NASDAQ Composite gained 0.41 percent to 2,988.34, compared to its crisis low of below 1,300.

  The Greek debt writeoff deal, sealed on Friday, allowed the indices to work off midweek losses, and relatively buoyant economic data, including a better-than-expected jobs report on Friday, helped.

  Unemployment data for last month showed strong job creation for a third straight month, with 227,000 jobs added, though the overall unemployment rate held at 8.3 percent.

  Even though separately released trade figures for January showed a rise in the trade deficit — usually a negative for growth — Jeffrey Rosen of Briefing Research said the signs generally point to a strengthening economy.

  “Payrolls have grown on average by nearly 100,000 more per month than they did last year, businesses are stockpiled with cash, and consumer debt is more manageable,” he said.

  “As long as consumption remains on track, which looks to be the case given the steady rise in earnings and overall net worth, economic growth should accelerate from here,” Rosen added.

  However, others said that the markets need more to keep growing, especially as the strong corporate profit growth of last year appears to be easing.

  “Like the crocuses and other flowers now poking their heads up from winter lairs, the stock market rally of 2012 has sprung less from presence of supportive conditions than it has from the lack of expected adversity,” a poetic Vaughan Scully of S&P Capital IQ said.

  “The lack of an expected US economic slowdown [has] helped to spur strong gains in equities in spite of the fact that unemployment is still high, the housing market is still weak, and profit growth is slowing,” he said.

  The markets remain vulnerable to any sign of bad news — for instance China’s downward revision this week of its growth forecast for this year, to 7.5 percent, he said.

  Moreover, S&P Capital IQ data shows that consensus estimates for first quarter earnings per share growth are just 0.8 percent, compared to 8.3 percent in the last quarter of last year, he added.

  “The surge in February nonfarm payrolls arguably creates a strong case for a sustained and indeed strengthening recovery, but the chills of winter probably haven’t left for good yet,” Rosen said.

  The coming week could give a clearer picture of the economy’s direction.

  The US Federal Reserve policy board meets on Tuesday and while not expected to change its ultralow interest rate policy or even hint at any stimulus measures, the picture it paints of economic growth will be closely watched.
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