By Kate Gibson
NEW YORK (MarketWatch) -- The U.S. stock market will try to reclaim its footing in the week ahead after a shellacking that brought the Dow Jones Industrial Average back to its lowest level since the midterm elections.
"Next week there is a lot of economic data, and if they continue their recent trend of coming in somewhat better than expected, it will be interesting to see if that brings buyers back into the market after the recent dip," said Michael Sheldon, chief market strategist at RDM Financial.
Coming economic reports, which include leading indicators, retail sales, production, regional activity and business inventories will likely show "the economy is stabilizing just enough to avoid recession," suggested T.J. Marta, chief market strategist at Marta on the Markets Inc.
On Friday, the Dow (DJI) fell 90.52 points, or 0.8%, to 11,192.58, leaving the blue chips down 2.2% for the week.
The S&P 500 Index (SPX) fell 14.33 points, or 1.4%, to 1,197.19, down 2.2% from the week-ago close.
The Nasdaq Composite Index (RIXF) declined 37.31 points, or 1.5%, to 2,518.21, leaving it with a weekly loss of 2.4%.
The Nasdaq was especially hard hit by Cisco Systems Inc.'s (CSCO) disappointing outlook, with investors trying to gauge the implications of the forecast from the industry bellwether.
"The news from Cisco was clearly negative for technology; we're still trying to figure how much of that news was company-specific as opposed to the overall state of technology spending. From an investor's perspective, you wonder whether Cisco will turn into the next Dell Inc. (DELL), which lost its way after a strong multiyear performance," said Sheldon.
Most of the news, whether related to politics, the economy or corporate earnings, has been on the positive side the last few weeks, helping the market rebound off its summer lows, he added.
But Friday's tumble had analysts citing worries about European debt and China's anticipated steps to curb its economy.
"Higher inflation data out of China along with renewed worries in parts of Europe have caused investors to take profits after the recent run-up, especially in commodity and commodity-related parts of the market," according to Sheldon.
But he and others also believe the market was due for a pullback. "You can blame this on the fear of a Chinese rate hike or whatever else, but a break is a break. Today, those that confused brains with a bull market learned that it's not easy to consistently ring the register," Elliot Spar, market strategist at Stifel Nicolaus noted Friday.
"It seems this week's market performance is simply letting off some steam after the recent advance," said RDM's Sheldon, who also pointed out that from a technical perspective, the S&P 500 ran into resistance at about 1,228.
"Coincidentally this represents a two-thirds retracement of the entire bear market going back to the fall of 2007," he elaborated, viewing the overall technical picture as fairly healthy.
The Dow, the Dow transports (DJT), the Nasdaq and the Russell 2000 Index (RUT) have all broken above their spring 2010 highs in recent weeks, Sheldon commented. "Volume has picked up, and there's been a significant increase in the number of new 52-week highs as the market headed higher in November. The one fly in the ointment is sentiment has gotten a bit rich, and may have gotten ahead of itself."
On the earnings front, 458 companies in the S&P 500 as of Friday had reported results for 2010's third quarter, with the coming five weeks bringing the last 42 that remain. In the week ahead, 23 S&P 500 companies are scheduled to report, along with two Dow components.
Monday brings a trio of retailers: Nordstrom Inc. (JWN), Lowe's Companies Inc. (LOW) and Urban Outfitters Inc. (URBN), while Tuesday's calendar includes Dow stocks Home Depot Inc. (HD) and Wal-Mart Stores Inc. (WMT), along with Abercrombie & Fitch Co. (ANF), Jacobs Engineering Group Inc. (JEC) and TJX Companies Inc. (TJX)
Wednesday's list includes Target Corp. (TGT), NetApp Inc. (NTAP), Limited Brands Inc. (LTD) and Applied Materials Inc. (AMAT)
The earnings calendar is heaviest on Thursday, with Gap Inc. (GPS), Staples Inc. (SPLS), Sears Holdings Corp. (SHLD), Salesforce.com Inc. (CRM) and Intuit Inc. (INTU) among the 10 S&P 500 companies expected to report.
Also Thursday: J.M. Smucker Co. (SJM), Autodesk Inc. (ADSK), GameStop Corp. (GME), Helmerich & Payne Inc. (HP) and Ross Stores Inc. (ROST)
On Friday H.J. Heinz Co. (HNZ) is the sole S&P 500 company slated to report.
In the week just ended, energy proved the sole sector among the S&P 500's 10 industry groups to gain, even as the broad market fell, with the sector's gains reflected in data compiled by S&P's Capital IQ.
Capital IQ lists the following as the S&P's top five gainers for the week from Nov. 5 through Nov. 11:
1. Halliburton Co. (HAL), up 13.8%
2. Consol Energy Inc. (CNX), up 11.3%
3. Range Resources Corp. (RRC), up 10.2%
4. Cabot Oil & Gas Corp. (COG), up 9.5%
5. EQT Corp.(EQT), up 8.6%
The S&P 500's bottom five performers for the five-day period are listed as the following:
1. Dean Foods Co. (DF), off 26.9%
2. Cisco Systems Inc. (CSCO), off 15.4%
3. Assurant Inc. (AIZ), off 14.1%
4. Micron Technology Inc. (MU), off 9.3%
5. Boeing Co. (BA), off 8.3%