Posted on June - 27 - 2011
Traders May Tread Cautiously Even As Deal News Encourage
– The major U.S. index futures are pointing to a higher opening on Monday, with M&A news likely to impart some buoyancy to the markets. After declining in each of the past six weeks, stocks now trade at oversold levels. Against this backdrop, bargain hunting could generate some buying interest. That said, a few first-tier economic data to be released over the course of the week could limit any potential upside. On the upside, the Dow could face resistance around 12,083 and downside support for the index lies around the 11,937 and 11,776 levels.
U.S. stocks extended their weekly losses in the week ended June 10th, as economic uncertainties continued to haunt the markets. Commodities, technology, airline and housing stocks were the worst hit.
Last Monday, the major averages ended moderately to notably lower amid a lack of any major market moving catalysts, thereby extending their declines for the fourth straight session. Federal Reserve Chairman Ben Bernanke’s comments spooked the markets on Tuesday, as the major averages surrendered their early gains generated on the back of bargain hunting, ending lower.
More weakness followed, as on Wednesday, stocks retreated amid the continuing economic uncertainty. Meanwhile, bargain hunters returned in full force on Thursday, as they relished a report showing an unexpected narrowing of the trade deficit for April, sending stocks notably higher.
Stocks retreated sharply on Friday on the general pessimism concerning recovery that has been gaining ground since the beginning of May. With the markets retreating in 4 out of the five sessions of the week, they major averages ended the week at their worst closing levels in about 3 months.
For the week, the Dow Industrials ended down 1.64 percent and the S&P 500 Index receded 2.24 percent, while the Nasdaq Composite Index fell 3.26 percent.
Among the sector indexes, the NYSE Arca Gold Bugs Index retreated 5.36 percent for the week, while the NYSE Arca Airline Index and the Philadelphia Oil Service Index fell over 4 percent each. The Dow Jones Transportation Average, the Philadelphia Housing Sector Index, the NYSE Arca Biotechnology Index and the Philadelphia Semiconductor Index all lost over 3 percent.
Currency, Commodity Markets
Crude oil futures are sliding $0.59 to $98.70 a barrel after receding $0.93 or 0.93 percent to $99.29 a barrel in the week ended June 10th.
Last Monday, oil declined sharply, reversing its two session-advance amid the increase in risk aversion. However, the commodity reversed course on Tuesday, although rising only modestly.
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