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.
Tech talk
"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%