US & Global Economies Still Under Spotlight
As Wall Street enters the final quarter of 2011, investors need to come to grips with some of the fears that drove stocks down on Friday, ending what has been declared as the worst quarter since the beginning of the financial crisis. The Dow Jones industrial average dropped 240 points to close at 10,913, the S&P 500 fell by 30 points to close at 1,131, while the Nasdaq Composite slid 65 points to close at 2,415 – recording declines of 2.1 percent, 2.5 percent and 2.6 percent respectively. For the Dow it was the worst quarter since the first three months of 2009, while for the S&P 500 and Nasdaq it has been the worst since the final quarter of 2008. While investors are, of course, hopeful for improvements moving ahead, indications are that the problems plaguing the US economy, as well as the global economy, are likely to continue unabated for some time.
The fate of the euro is currently the subject of intense interest. Once touted as a worthy replacement of the US$ for international trade, the euro has been taking a beating spurred on by the economic woes of Eurozone countries Greece, Spain, Portugal and Italy. Nevertheless, a recent survey revealed that many top economists have confidence that the euro will survive without ousting any Eurozone members, mainly because France and Germany will not allow it to fail, although fears of increasing dissatisfaction at austerity measures being implemented appear to be warranted, as are fears that the European banking sector may fall apart.
As Europe continues to play a significant role in market movement, the week ahead on Wall Street includes the latest ISM manufacturing index, and Commerce Department construction spending figures on Monday. It is anticipated that the ISM index will fall from last month’s 50.6 to 50.5, with construction spending expected to drop 0.5 percent. Also on Monday, automakers will report September’s sales. Tuesday morning, Federal Reserve Chairman Ben Bernanke will address the Joint Economic Committee of Congress on the economy’s outlook. Earning reports are due from KFC owners YUM!, Taco Bell and Pizza Hut. Speculation is rife that Apple will be presenting its much-touted iPhone 5 at an afternoon event.
Wednesday sees the release of the ADP private employment report which economists expect a figure of 48,000 workers being hired in the private sector for September. Costco, Monsanto, and Marriott will be reporting quarterly earnings on Wednesday. As usual, the Labor Department will release weekly initial jobless claims data on Thursday, with analysts anticipating an increase from 391,000 to 401,000 since last week. The week draws to an end with the Labor Department’s jobs report for August.