WALL ST THE WEEK AHEAD
IF Wall Street needs to climb a wall of worry, it will have plenty of opportunity over the course of this week.
Major US stock indexes will make another attempt at reaching all-time records, but the fitful pace that has dominated trading is likely to continue. Friday’s unemployment report and the hefty spending cuts that look like they about to take effect will be at the forefront.
The importance of whether equities can reach and sustain those highs is more than Wall Street’s usual fixation on numbers with psychological significance. Breaking through to uncharted territory is seen as a test of investors’ faith in the rally.
“It’s very significant,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
“The thinking is, there’s just not enough there for an extended bull run,” he said. “If we do break through (record highs), then maybe the charts and price action are telling us there’s something better ahead.”
Flare-ups in the Eurozone’s sovereign debt crisis and Friday’s report on the US labour market could jostle the market, though US job indicators have generally been trending in a positive direction.
Small and mid-cap stocks hit lifetime highs in February. Now the Dow Jones industrial average and the S&P 500 are racing each other to the top. The Dow, made up of 30 stocks, is about 75 points – less than 1 per cent – away from its record close of 14,164.53, which it hit on 9 October 2007. The broader S&P is still 3 per cent away from its closing high of 1,565.15, also reached on 9 October 2007.
The advantage may be in the Dow’s court. So far in 2013, it has gained 7.5 per cent, beating the S&P 500 by about one per cent.