Weekly Market Summary and Outlook for the Trading Floor Newsletter:
Market Summary
The bear market rally was brought to an abrupt end this week as Americans finally came to the realization that the U.S. might be in a recession. Two polls regarding the probability of a recession, one of American consumers, one of Wall Street economists increased to 59% and 49% respectively.
Its no wonder with the amount of negative data released this week. Factory orders missed expectations by 0.3%. Pending home sales fell 1.5% more than expected for December making it a 24.2% decline in 2007. And most importantly, ISM non-manufacturing data which accounts for almost 90% of the U.S economy dropped by 12.5 points to 41.9, the largest one month drop in its entire history. Maybe Bernanke wasn’t insane after all when he made those rate cuts. There has been some good news with the $151 billion stimulus plan having passed the senate this week but it’ll take a lot more than to improve the steadily worsening economic prospects.
Market Outlook
While the economic data that comes in next week may not be as significant as last weeks, it may just be able to convince the 51% of economists still in denial that a recession is in progress. The retail sales report, a measure of the total sales receipts of retail stores, will tell us whether the American consumer is still driving the economy forward while the capital utilization and industrial production indexes will give us an indication of production levels. More negative news will only compound the misery the stock market has undergone.
Posted by jqwerty 
