The Week Ahead: The jobs report failed to inspire confidence in stocks as all but 20,000 jobs created were temporary census workers. The report was a catalyst for the Dow Industrials to fall below 10,000 on increasing volume. Nervous markets will be watching the Consumer Credit report on Monday, Wholesale Trade numbers and the Fed Beige Book data on Wednesday. By Thursday, expect the International Trade numbers as well as the Jobless Claims for the past week. Friday’s Retail Sales, Business Inventories, and Consumer Sentiment releases will rap up a busy and likely volatile week.
Stocks to Watch: Industrial and Material stocks faired the worst do to ties with the global economy. Heavier than normal volume was associated with Caterpillar (CAT), Boeing (BA), and General Electric (GE). Others include Textron (TXT), Jacobs Engineering (JEC), and trucking company Ryder Systems (R ). Worries about less global demand for steel impacted US Steel (X ), AK Steel (AK), and Cliffs Natural Resources (CLF). Concerns about European debt problems can be seen through ETF stocks of Europe such as the I-shares for Italy (EWI), Spain (EWP), and Belgium (EWK) whose debt is greater than Spain and Portugal relative to the size of its economy.
Special Note: During the the market peak in 2007 and subsequent low in 2009, many analysts cited US companies market presence in countries overseas as a saving grace for continued earnings growth despite a weak domestic economy. The burgeoning debt crisis is proving to have no boundaries as seen by a growing list of European countries including the recent threat of default by Hungary. How long can earnings be sustained as economies around the world endure budget cuts and contraction of the very debt that helped sustain their growth?
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