MW: U.S. stock rally to be tested by jobs, earnings, G20
After best 14 days for stocks in seven decades, some hurdles are coming up
A huge three-week rally in stocks will meet a number of stumbling blocks next week, including some earnings, a meeting of finance ministers and central bankers from the G20, as well as the key jobs report for March.
Congress will also be hearing comments on key proposals to change to mark-to-market accounting.
"We've had the largest three-week move in stocks since 1938," said Hugh Johnson, chairman of Johnson Illington Advisors. "It's probably asking for a lot that the market continue to move higher over the next three weeks. We have some formidable challenges coming up ahead, and it would seem that it's time for a breather."
On Friday, stocks fell but still closed a strong week of gains. The Dow Jones Industrial Average ($INDU:
7,776.18, -148.38, -1.9%) fell 148 points, or 1.9%, to end at 7,776. The S&P 500 Index ($SPX:
815.94, -16.92, -2.0%) fell 16 points, or 2%, to end at 815, while the Nasdaq Composite Index (COMP:
1,545.20, -41.80, -2.6%) lost 41 points, or 2.6%, to end at 1,545.
For the week, the Dow rallied 6.8%, the S&P 500 gained 6.2% and the Nasdaq rose 6%. For the month so far, the Dow is up 10.1%, the S&P is up 11% and the Nasdaq adds 12.2%.
The S&P 500, which investing professionals use as the benchmark of the broad market, scored its best 14-day gains since July 1938.
But some of the stock market's reactions on Friday led some to believe that the rally might be long in the tooth ahead of the first-quarter earnings reporting season.
"Back in February and early March, we had a number of banks coming out with upbeat quarterly results and forecasts, and that helped spark the rally," said Owen Fitzpatrick, head of U.S. equities at Deutsche Bank.
"But even if it got a bit better in March, overall industrial activity has remained weak and that will translate into weak earnings and companies taking down their forecasts," he added. "This will throw a little bit of cold water on this rally."
For instance, Accenture Ltd. (ACN:
27.66, -4.30, -13.4%) , the consulting and outsourcing firm, warned about its outlook for the rest of the year on Thursday.
Of particular interest next week will be quarterly results from BlackBerry maker Research In Motion Ltd. (RIMM:
45.01, -0.03, -0.1%) on Thursday after the close. That same day will also bring results from Micron Technology Inc. (MU:
4.17, -0.05, -1.2%) , Monsanto Co. (MON:
86.24, -1.40, -1.6%) and Rite Aid Corp. (RAD:
0.41, -0.02, -4.6%)
On the brighter side for financials stocks, Fitzpatrick pointed out, Congress will hear comments on proposals for ba
