Friday, May 28, 2010

Headwinds Hinder Market

A number of headwinds both global and domestic conspired to keep the market in a trading range this week.In foreign news,Spain's credit rating was lowered a notch by Fitch,one of the three ratings agencies who played a controversial role in precipitating the financial crisis.Tensions between the two Koreas remained high over North Korea's sinking of a South Korean navy vessel,killing dozens of sailors.Domestically,the moratorium on deep-sea oil drilling threw earnings estimates of energy firms into question;the Chicago Purchasing Managers' Index missed estimates;and consumer spending came in unexpectedly flat.A market without buy and hold sentiment resulted from the swirl of events casting doubt on the recovery that had seemed so promising a few months ago.Twenty percent of retail investors say they are sitting in cash for at least the next three years,to the chagrin of brokerages.
Next week,the employment report will garner a lot of media attention,but overseas events could well eclipse it in the minds of worried investors.If a second credit freeze is really upon us,any gains in employment would have to be seen as suspect.They would be hard to sustain in the context of poor macro-economic conditions.Consequently,the S&P futures were down 12.60 this evening,while bond futures rose.
The Toronto Blue Jays held sway over the Baltimore Orioles with a 5-0 lead,while Philadelphia and Florida were tied 2-2.Phil Mickelson will attempt to achieve the number one ranking in professional golf this weekend,a designation that has so far eluded him.

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