Wall Street Likely to Remain Volatile This Week

With all eyes on the seesawing Dow Jones industrial average and other top indices throughout last week, investors are becoming increasingly anxious about stock market volatility, and word is that the coming week is not likely to be much better as Wall Street continues to do battle with waves of uncertainty caused by S&P’s downgrade of the US economy from AAA to AA+, despite the fact that AA+ is still considered to be a good rating. Problems in Europe, including the possible downgrading of France’s credit rating and the question of whether the Eurozone and the Euro, recently considered to be overshadowing the US Dollar as a trading currency, will survive the turmoil, along with concerns over the stagnant US job market, has investors being extremely cautious as they search for a glimmer of positivity and an indication as to which way to go. Investor uncertainty was reflected in the Wall Street fear index, the VIX, which climbed to a level last seen in early 2009.

The Empire Statement manufacturing index being released on Monday will reveal if the trend of contracted manufacturing activity has continued. Urban Outfitters and Lowe’s will start the ball rolling as retailers report second quarter results and forecasts in the coming week. Tuesday sees reports from Wal-Mart and Home Depot, as well as from PC maker Dell. Tuesday’s economic reports include July housing starts and building permits, as well as the Fed’s industrial production figures for July.

Retail chain, Target, will be reporting on Wednesday, as will Deere – manufacturer and distributor of farming equipment. The Labor Department is set to release its inflation indicating producer price index for July, which is expected to remain flat. Weekly jobless claims and the Labor Department’s consumer price index are due on Thursday. Stock market listed companies reporting on Thursday include Hewlett Packard, Gap, Sears Holding, and GameStop. No market-moving reports are due on Friday.

While Wall Street investors will mainly be focused on the state of the US economy, the head of the World Bank, Robert Zoellick, is concerned that many influential market participants have lost confidence the economic leadership of some countries, presenting the scenario where the global economy may be pushed into what he termed as a ‘new danger zone’ – a situation that is likely to impact on investors everywhere.