That stock News

NEW YORK (Reuters) – Without a boost from Washington policymakers or data showing budding strength in the economy, Wall Street's rally may be running out of fuel as the S&P 500 eases off its 2010 high.

A data-heavy week could give investors hard evidence to justify a rally that lifted the S&P 500 16.8 percent from its August 31 close to the 2010 closing high hit last week.

But the index has been unable to move above 1,228, a key resistance level, and its chart is brewing a double-top formation, a very bearish signal.

"We're susceptible to a pullback if we don't get any clarity on fiscal policy and if any of this economic data disappoints next week," said John Lynch, chief equity strategist at Wells Fargo Funds Management in Charlotte, North Carolina.

"I would think you're going to see some, not all, smart money pull their investment (out of stocks) the closer we get to 1,228. These guys recognize we still have above 9 percent unemployment, sovereign credit risks, a consumer deleveraging and no clarity as to what businesses should do with their cash."

For the week, the Dow Jones industrial average (.DJI) and the Standard & Poor's 500 index (.SPX) each fell 2.2 percent. The Nasdaq Composite index (.IXIC) lost 2.4 percent.

The S&P 500 brushed the 61.8 percent retracement of its slide from the historic highs in 2007 to the low in March 2009.

This was the second time the index backed away from the 1,228 area and its chart could be drawing a bearish "double top" formation. The last retreat from that level, in April, was the start of a correction that took the S&P to its 2010 low in July.

The S&P 500 dipped on Friday below its 20-day moving average for the first time since September 1 but managed to close above it in a sign that that level, currently just above 1,194, could provide strong technical support.

LET'S TALK ABOUT TAXES

Investors will closely watch a meeting next Thursday between U.S. President Barack Obama and congressional leaders to discuss policy, including tax cuts.

Republicans will take control of the House of Representatives starting in January following their strong gains in the November 2 elections. They have vowed to force a full extension of all tax cuts enacted during the administration of President George W. Bush. Otherwise, the tax cuts expire at the end of 2010.

Most of Obama's Democrats favor extending tax cuts only for the first $200,000 of income of individuals and $250,000 for families.

"Bush tax cuts are very important for the market," said Michael Yoshikami, president and chief investment strategist at YCMNET Advisors in Walnut Creek, California.

"If they're not renewed, that could cost 0.75 percentage point per year in GDP (growth). I don't think any other proposal would have that kind of significant impact. If dividend taxes were raised, that would be a still important but more minor issue," he said.

Many Democrats argue that renewing all the tax cuts would swell the record U.S. budget deficit and have little, if any, impact on cutting the high unemployment rate.

DATA BACK ON THE TABLE

Following a week in which the few macroeconomic indicators barely influenced stocks, a slew of data ranging from manufacturing to leading indicators to retail sales, and, perhaps most importantly, inflation, will return investors' attention to market fundamentals.

Producer prices are expected to have risen 0.8 percent month-over-month in October. The U.S. government measure, out on Tuesday, could add to concerns following September's rise, which was twice what analysts expected. With little leverage to pass on costs to cash-strapped consumers, businesses may have to swallow any price hikes, weakening margins and profits.

The year-on-year consumer prices index, due on Wednesday, is expected to show a dip to 0.7 percent from 0.8 percent in September when food and energy prices are excluded.

Consumer staple companies highlighted "concerns about rising commodity costs and to what extent are businesses able to pass costs through the chain," said Wells Fargo's Lynch.

He pointed to businesses willing to absorb much of those price hikes, "which would be consistent with my perception that earnings and margins estimates for next year are too high."

On Monday data could show retail sales gained in October, while a separate report on September inventories could detail unwanted supply piling up at businesses.

Federal Reserve Chairman Ben Bernanke could provide a signal on the strength of the Fed's bond-buying commitment in remarks in Frankfurt on Friday.

(Reporting by Rodrigo Campos; additional reporting by Ryan Vlastelica, Doris Frankel and Thomas Ferraro; Editing by Kenneth Barry)

(Wall St Week Ahead appears every Friday)

View the original article here

WASHINGTON - Consensus is built at the Federal Reserve of a new program for pumping the economy through the purchase of the Treasury, obligations.

Fed Chairman Ben Bernanke and his colleagues seem to be closing the idea of their meeting in September, according to minutes of unexpected deliberations were released the mardi.Les economists predict Fed officials approve program meeting November 2-3.

Fed policymakers also spoke at length meeting on 21 September on a strategy to increase spending by people suggest prices might increase in the near future, after expressing concerns that the economy was slower growth that they expect.

While the u.s. Federal Reserve officials did not see economy sliding toward a recession, they feared that it became vulnerable to the "potential adverse impact", according to the minutes .they have raised concerns that unemployment was 9.6% in the last months, would remain high.

Fed officials said they were willing to provide additional relief "before long," according to the minutes .the economists and investors, who took as a sign that they are ready to act.

"The Fed is close to the establishment of a second round" stimulus, Paul Ashworth, an economist at the economic capital, said the minutes showed.

Wall Street was waiting with impatience decision the Federal Reserve to buy debt, officially known as quantitative easing. The minutes of the US Federal Reserve has reported this move is close and all the major indexes.

Fed policy makers did not settle in big how debt purchase should be or how to structure the programme.Ces details are what they are fighting with as prepare them for the November meeting.

The Federal Reserve to purchase aims to lead the interest rates on mortgage loans, business debt and other loans.He hoped that this will stimulate us to boost spending, which could strengthen the economy and ultimately to chip away at stubbornly high unemployment rate.

Public comments by officials of the reserve US Federal since the meeting of 21 September suggests program will be smaller than the one he 1.7 billion dollars to the recession. In this program, the US Federal Reserve has purchased a mixture of mortgage-backed securities and debt.Effort was credited with forcing mortgage rates and support for the housing market is weakening.

Two Fed officials in recent observations suggested that new purchases should not exceed $ 500 billion.

The September meeting, some officials of the US Federal Reserve thought that the economic benefit of buying the debt could be "small".A smaller programme is not expected to lower rates as crisis-era program the Fed, say the économistes.En in addition, there is concern that even cheaper loans will fail to get people and businesses to the crossover of their spending.So far, they have not been sufficient confidence in the economy of their own financial perspective to do so.

Bernanke said last week that another series of purchase of securities would probably help the economy.

So far, five of the 11 reserve Federal members, including Bernanke, voters are bent towards additional assistance or are less open to it.Fed Vice President Janet Yellen, whose functions include the construction of support for the position of Bernanke is likely to vote with the Director of the reserve.Fed governors Kevin Warsh Elizabeth Duke, Daniel Tarullo, Sarah Bloom Raskin also are likely to return Bernanke.Thomas Hoenig, President of the Federal Reserve Bank of Kansas City, however, was the decision of the Federal Reserve, dissident year-round and is likely to oppose additional assistance.

Speaking Tuesday in Denver, Hoenig has said that he is not convinced that the debt more purchases "does not work in the real world."

William Dudley, President of the Federal Reserve Bank of New York, has estimated that a $ 500 billion program would provide the same amount of stimuli as a reduction of half-point or three-quarters to Senior Federal Reserve interest rate.This rate is already close to zero and cannot be further cut.That is why the Fed is weighing buy more debt.

Another option for helping the economy also discussed extensively during the September meeting, according to the minutes lekeage discusses the Fed is trying to raise the expectations of the population where they believe that inflation is headed in the months to venir.Si Fed communicate that it will tolerate a higher than normal inflation, which might make companies feel more inclined to move their prix.Shoppers - thought prices could be increased still further on the road - would be more likely to make purchases more t?t.Qui would raise inflation running now at very low levels.

Such an approach would push "real" or corrected for inflation of low interest rates could encourage more dépenses.Nourris officials at the meeting noted that there are different ways September might attempt to influence the expectations of inflation .a way was to include information in the minutes of the meetings of the Fed in an attempt to shape the expectations about inflation.

It is a controversial idea that Bernanke called "inappropriate" in August, taking into account the current economic circumstances pays.Cependant, at the time he said such an approach "could make sense" If the country was mired in a situation of prolonged deflation that weakened the public trust.

According to the minutes of the US Federal Reserve officials "seen only in small dimensions of deflation."Deflation is generalized decline in prices, wages and stocks and house values.

Copyright 2010 the Associated rights Press.Tous réservés.Ce hardware cannot be published, broadcast, rewritten or redistributed.

View the original article here