MW: U.S. stocks in precarious place given economic uncertainty
Pessimism reigns; bulls look to earnings ahead as possible silver lining
By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- The U.S. stock market will begin the holiday-shortened week in a precarious state, with the third quarter off to a rotten start and the S&P 500 Index perilously close to breaching 1,000 for the first time since September.
"We bulls can't catch a break," said Linda Duessel, equity-market strategist for Federated Investors.
The optimists almost had their way late Friday, with the major indexes shedding their daylong losses in the final 30 minutes of trading. Then just ahead of the closing bell, they lapsed lower again to top off Wall Street's worst week since May 7 -- the week of the so-called "flash crash."
The past week's slide came as downtrodden investors mulled the state of the economic recovery with domestic worries, particularly the high count of unemployed Americans, overriding Europe's debt trouble and slowing growth in China.
In the week ahead, only one S&P 500 company offers quarterly results, with discount retailer Family Dollar Stores Inc. (FDO 38.62, -0.13, -0.34%) reporting on Wednesday.
Like earnings, economic data in coming days are limited, with the Institute for Supply Management on Tuesday releasing its index on nonmanufacturing activity for June, and the government slated to release weekly jobless claims figures on Thursday.
U.S. stock markets are closed Monday for the July 4 holiday.
When they return, investors will be assessing their positions in the wake of stocks' dismal start to the third quarter. Some analysts say the pullback suggests the market is pricing in a double-dip recession.
"Stocks are pricing a major deceleration in economic growth and revising down the outlook for corporate profits," according to Nick Kalivas, an analyst at MF Global.
Weekly wrap
Down for seventh consecutive session, the Dow Jones Industrial Average (DJIA 9,686, -46.05, -0.47%) on Friday fell 46.05 points, or 0.5%, to 9,686.48, leaving it with a weekly drop of 4.5%.
The S&P 500 (SPX 1,023, -4.79, -0.47%) shed 4.79 points, or 0.5%, to end at 1,022.58, off 5% from the prior Friday's close.
The Nasdaq Composite Index (COMP 2,092, -9.57, -0.46%) declined 9.57 points, or 0.5%, to 2,091.79, off 5.9% for the week.
The last such Monday-through-Friday slide happened from Oct. 6 through Oct. 10, 2008, when the S&P 500 tumbled just more than 18% in one week, said Howard Silverblatt, senior index analyst at Standard & Poor's.
That October 2008 retreat came at the peak of the financial crisis, following the collapse of Lehman Brothers Holdings Inc. (LEHMQ 0.07, +0.00, +2.53%) Credit costs spiked, there also was "something about mortgages, liquidity, shorts and financial institutions," said Silverblatt of the 2008 losing stretch.
Last week's retreat came as economic reports illustrated weakening growth in manufacturing, an unexpected jump in jobless claims and a drop in home sales, all of which fed fears that the recovery is stalling.
