هـل الـســوق بـحـاجـة الى مـزيـدا مـن الـهـبـوط ؟

[الاســــتا ذ]

For the week, the Dow fell 80.82 points to finish at 10190.82, while the Nasdaq lost 13.84 points to close at 1756.19.

The S&P slipped 11.73 points to end at 1110.83.

Volume picked up a bit from the previous week, but still was on the light side for this time of the year.

It was a rough week for the equity markets, due to several profit warnings, as well as a revenue miss from bellwether General Electric and a warning from IBM.

Even though the markets were able to rebound somewhat, the selling started to pick-up again in the middle of the week.

Also hurting tech shares were comments from Tom Siebel (SEBL's CEO) that we could see up to 200 tech companies go out of business in the next year.


In addition, Mr. Siebel suggested that his company just completed what he thought was the worst quarter ever and he sees no sign of a pick-up.

These comments were quite different from what the company said in January, when the famous "we see the bottom" call was made.

Mr. Siebel's statement had quite an adverse effect on the software sector, which was already under pressure from both Oracle's and PeopleSoft's warnings.

Tech shares were able to rebound Friday, and this help the Nasdaq's performance for the week.

Blue chip shares also finished to the downside, largely due to the lack of visibility of corporate America.

Despite the Dow finishing lower, we feel that most stocks held up rather well given how bad the news was, not to mention the significant drop which occurred in both GE and IBM.

Strong for the week were healthcare stocks, which continue to outperform the overall market.

All in all, we felt it was impressive that the Dow did not even lose 1% during a week when things could have been much worse.

 

[الاســــتا ذ]

Moving forward, corporate profit reports should be the primary driver of the markets.

The upcoming week will be the busiest of this earnings season.

Scheduled to report are IBM, Johnson & Johnson, Intel, Microsoft, Sun Microsystems, Bank of America, Citigroup, Novellus Systems, Texas Instruments and General Motors.

So far this earnings season has gotten off to a rocky start, so it will be very critical for some positive guidance to come out of the reports ahead.

Let's not forget, P/E ratios across the board remain near historical high levels. As such, it's pretty much now or never for corporate America when it comes to delivering earnings (at least with regard to keeping stock prices at current levels).

We get the impression the investment community is losing its patience. In other words, the much touted recovery in corporate profits should at least be starting to show some signs of unfolding, otherwise it could spell trouble for stocks.

 

[الاســــتا ذ]

Also on the agenda are a number of economic reports.

They include: the Consumer Price Index, housing starts, initial jobless claims and the Philadelphia Fed Report.

Once again, all of these reports should have the ability to move the markets.

Recently, there have been signs the recovery may be losing steam.

A case can even be made that much of the stronger-than-expected Q4 GDP was the result of government spending tied to 911, warm weather, tax rebates and low energy prices.

Clearly, the economic outlook is still very puzzling to even many of the top economists on Wall Street.

Therefore, in addition to the risk that earnings may not rebound, there is also risk that the economic recovery may not pan out like many of the pundits are planning.

With that said, we continue to feel it's best to remain on the cautious side moving forward.