Friday saw stock market indicators closing at their highest level in a year as Alcoa kicked off the third quarter earnings season by reporting an unanticipated profit. Additional factors behind the surge in stocks included a rally by Intel and IBM as well as better-than-expected economic data which is seen as an indication that the US recession is coming to an end. The Dow Jones industrial average reached 9,864.94, being an increase of around 4 percent, at close of business on Friday, while Standard & Poor’s 500 stock index closed at 1,071.49, an increase of 4.5 percent for the week, and the Nasdaq composite index ended the week at 2,139.28, being a gain of 3.99 percent for the week.
The initial trickle of US corporate earnings reports is expected to become a steady flow during the upcoming week, with stock market investors no doubt focusing their attention on these, looking for indications of economic recovery. Also of interest will be forecasts for the fourth and final quarter of 2009. It is widely accepted that the financial sector has been at the root of the financial crisis, beginning with the collapse of Lehman Brothers a year ago, and third quarter results and fourth quarter forecasts for financial institutions will most likely be scrutinized. JP Morgan Chase is due to release its results on Wednesday, with Goldman Sachs Group, Citigroup and Bank of America following soon after. Investors will be interested to see if consumer loan and mortgage defaults have started to level off, and with commercial real estate loans also starting to take a beating, investors will be cognizant of just how much of a problem this has become. Other stock market listed companies due to report in the next week include SouthWest Airlines, General Electric, Johnson & Johnson and tech-giants Google, Intel and IBM.
Wednesday also sees the release of the minutes of the Federal Reserve’s September 22-23 meeting, which will likely shed some light on the Fed’s plans regarding stimulus measures and the future of interest rates. With the Dow closing on Friday less than 136 points shy of the 10,000 mark if the week’s news is good the Dow may very well pass the 5 digit mark for the first time in a year. It is generally agreed, however, that even if the upcoming week’s news is not up to scratch it is unlikely that stocks will plunge dramatically, but will more than likely pull back between 3 and 5 percent.
