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.

S&P In Correction's Shadow

The S&P remains in correction mode this weekend,being down 10.6% from its April high.For the week,the index fell 4.2,while the Dow stumbled 4.0 and the NASDAQ crumbled 5.0.Yes,the Eurozone debt crisis was a fundamental concern;but it wasn't just Europe.Unemployment claims here rose sharply and unexpectedly,up 471,000.Two important manufacturing reports,the Philly Fed and the Empire State,showed a decline in new orders,and the index of Leading Economic Indicators was down as well.
In sum,the recovery went on vacation this week,leaving investors behind to contemplate a return to serious worry.The idea of a double dip recession had been receding this year to almost invisibility,but has a renewed credence now.Cash is looking more attractive than it has in some time as we grope our way through a new maze of uncertainty.Indeed,it seems the path of wisdom until the fear index settles back at least somewhat.
The futures are a mute equation.Both the equity and bond futures are up,indicating confusion about what lies ahead.Baseball is simpler.Baltimore led Washington tonight in inter league play,while Virginia was topping Miami in college ball.

The Pond Is Small

A one-track market was linked to European affairs this week,with very choppy conditions prevailing.Even so,all the major indexes were up for the week,with the Dow garnering a 2.3 rise,and the NASDAQ climbing 3.6 as the S&P notched 2.2.All the major overseas markets rose as well.Until the Eurozone debt arrangements are actually implemented,the U.S. markets are unlikely to settle down.Triple digit swings may be expected to continue,regardless of positive economic data,such as today's retail sales report showing an increase for the seventh straight month.The days of Fortress America are long over.Today there are nothing but bridges to distant territories.
In college baseball,Miami was wishing it was distant from Georgia Tech tonight.The Yellow Jackets were pounding the Hurricanes 13-1 as a rain delay stopped the 6th inning.ESPN was already talking about college football,while the S&P futures headed down 21.50 and bond futures gained.

Reaping The Whirlwind

The financial crisis was back in force this week,casting doubt into the minds of investors.Those old days of 2008 seemed to have returned.Headlines were to be dreaded once again.The Eurozone debt problem generated huge slides in equity prices,raising the possibility that there may be another leg down in a seemingly endless time of economic peril.The S&P was off 6.39 for the week,while the Dow lost 5.71 and the NASDAQ tumbled 7.95.
A positive employment report was all but brushed aside in the climb up the wall of worry.To be sure,the Eurozone issue has been on the radar screen for several months.As a May 19 deadline for Greece approached,however,it came into unnervingly sharp focus,sending rioters into the streets of Athens.A summit of European leaders this weekend to address the problem could hold the market's fate in its hands.In response,the S&P futures were down 15.40 this evening.
The Florida Marlins were leading the Washington Nationals 4-2 in the highly competitive National League East,and golf fans awaited the Players Championship,where Tiger Woods will face Phil Mickelson in another chapter of his return saga.