U S stock investors could scramble to pick up some of the market’s recent best performers this week as the quarter comes to an end, putting the spotlight on energy and industrial companies.
But worries about Japan, the Middle East and oil prices will persist and keep uncertainty high, analysts said, even as the VIX, the CBOE Volatility Index, slid 27 per cent over the past week.
Another driver could come from economic data, with the US government’s March payrolls report – the most widely watched economic indicator of the month – due on Friday.
Economic data lately has taken a backseat to geopolitical events, with Japan’s massive earthquake and tsunami sparking fears of a nuclear disaster in the country and driving the most recent pullback in stocks.
But many expect window dressing, where fund managers sell stocks with big losses and buy ones with big gains to spruce up their portfolio’s quarterly performance, to dominate trading.
“I think a number of people viewed the harshness of the sell-off as an opportunity to pick up some inappropriately punished stocks,” said Michael Strauss, chief economist of Commonfund, based in Wilton, Connecticut.
The strategy contributed to a bounceback late last week, with the Dow Jones industrial average and Nasdaq posting their best weeks since July. The benchmark Standard & Poor’s 500 had its best week since early February.
The earnings reporting period is set to start in the second week of April.