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NEW YORK: US investors are girding for fresh stock
turmoil in the coming week after riding a market roller-coaster in
recent days, which has shaken their confidence in the mortgage and
credit markets.
The major US stock market indexes
ended the week higher Friday than a week ago, but investors saw
their portfolios whip lashed as uncertainty about the troubled US
housing sector and a related credit squeeze swept world markets.
The leading Dow Jones Industrial
Average has dived and jumped by over 200 points in recent days,
investors have fled mortgage related investments, and the Federal
Reserve has injected tens of billions of dollars into the financial
system to shore up confidence.
The blue-chip Dow gained 0.44
percent for the week to end Friday at 13,239.54, following a
0.63-percent decline in the prior week and an over 4-percent drop in
the week before that.
The broad-market Standard &
Poor’s 500 rose a more substantial 1.44 percent over the week to
1,453.64.
The tech-rich Nasdaq composite
increased 1.34 percent on the week to Friday to finish lower at
2,544.89.
Despite the end-of-week gains,
analysts said fresh Fed interventions could be required in coming
days if the markets display renewed volatility and credit problems.
“Central banks are doing the
right thing, they’re adding liquidity to a system that needs it
and they will continue to do so until it doesn’t need it.
“It’s part of the process to
get out of the credit crunch and financial turmoil,” said Art
Hogan, an analyst at Jefferies and Co.
The US central bank pumped $38
billion into the financial system on Friday in move which some
analysts said helped bolster sentiment.
While much of the past week’s
focus was on the stock market and mortgage and credit sectors,
economic news is likely to grab more headlines in coming days.
“Next week, it’s all about
the economy. We have a lot of economic news coming out. If the
economic news remains on the positive side, that could alleviate
some of the fears that the economy might be headed to slower
growth,” said Peter Cardillo, an analyst at Avalon Partners.
Despite the market jitters,
growth in the US economy accelerated to a 3.4-percent annualized
pace in the second quarter, up from a 0.6-percent crawl in the first
three months of the year.
However, some economists believe
the housing downturn, which started over a year ago, and growing
fears about the mortgage market could spill over into the wider
economy.
A government report on housing
starts next Thursday will likely stimulate interest.
Most economists expect housing
starts to slow to 1.41 million in July compared with 1.47 million in
the prior month as homebuilders cut back on new developments.
Investors will get an update on
retail sales Monday with most analysts anticipating a rebound in
activity. Sales are forecast to rise 0.2 percent in July compared
with a 0.9-percent decline in the prior month.
Such a rebound, or a stronger
than expected report, would likely help restore some confidence,
market watchers said.
They also warned that further
trading dips could lay ahead.
“As we have been saying for the
last month, keep your seat belts and shoulder harnesses fastened.
The ride will remain rough,” said Frederic Dickson, an equity
analyst at DA Davidson.
Bond prices fell in the week to
Friday.
The yield on the 10-year US
Treasury bond rose to 4.776 percent from 4.700 percent a week
earlier. The 30-year bond yield jumped to 5.005 percent from 4.867
percent. Bond yields and prices move in opposite directions.
 --AFP
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