FOLLOWING the S&P 500’s worst week in 15, investors are trying to determine whether the predictions of a correction have been fulfilled or if there’s still downside ahead as oil prices remain at elevated levels.
Along with the direction of oil, potential market movers for traders will be the February payrolls report, which will be released on Friday, and Federal Reserve Chairman Ben Bernanke’s speech tomorrow.
The benchmark S&P index fell 1.7 per cent in the week, a relatively mild pullback for an index that has gained more than 25 per cent since the start of September.
“We were looking for a pullback of at least 5 per cent and we didn’t get it, so I don’t think we can expect a lot of new entrants at these levels,” said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management in New York.
“With the gains we’ve had, and since tensions remain high in the Middle East, I don’t expect to see aggressive buying on the dip this time around,” Grohowski said.
A lack of new entrants could mean lighter volume, which could leave the market more susceptible to increased volatility. Lately, volume has been stronger on down days in the market.
An unexpected surge in crude prices, sparked by Libya’s popular uprising, pressured equities for much of the holiday-shortened week on concern that higher energy costs could stifle economic activity.
US crude futures spiked as much as 20 per cent during the week to a high of $103.41 per barrel.