Investors remain on their guard on Wall Street
August 22, 2010
The investors said they would remain on their guard this week on U.S. markets, while trading volumes should be low and Wall Street is full of doubt and fear of seeing new signs of economic deterioration.
Stepping back from 0.7% last week, the S & P 500 posted its second consecutive weekly decline and further losses can be blamed because of the continuing investor concerns about economic statistics.
"The market will evolve in a defensive position (this) week," warned Paul Mendelsohn, chief investment strategist at Windham Financial Services.
"There may be some concern about the future statistics given the data we saw this week that suggest the economy could deteriorate."
Even the recovery of M & As is not enough to encourage investors to return to the market, given the disappointment and concern about the recent macroeconomic publications in the United States.
Yet, according to Thomson Reuters statistics, the amount of mergers and acquisitions announced since the beginning of August reached 197.6 billion dollars (156 billion euros) and is coming close to the record of 277 billion registered in 1999 .
FIGURES OF THE GROWTH OF 2nd QUARTER HIGH EXPECTED
Major operations this August include the hostile bid of $ 39 billion BHP Billiton Canada Potash, the world fertilizer, or the acquisition by Intel of anti-virus software specialist McAfee to 7.7 billion.
"The main objective of a merger is to reduce costs which means they will still cut more jobs," said Joe Saluzzi, however, co-manager of financial operations at Themis Trading.
The level of anemic trading volumes recorded recently on Wall Street is also another obstacle and highlights the degree of apprehension of investors.But this situation will not improve without a major driving force.
Since, according to Thomson Reuters data, 97% of values constituting the S & P 500 have released their quarterly results, attention is even greater as regards macroeconomic statistics.
In this context, the ads on Tuesday and Wednesday related to the evolution of sales in the housing market and those of durable goods for the month of July should be particularly monitored, awaiting the second estimate released Friday U.S. growth in the second quarter.
For this last statistic, economists polled by Reuters expect a 1.4% gross domestic product (GDP) U.S. real annualized in the second quarter, down from growth of 2.4% announced a month early in the first estimation.
However, the changing market mergers and acquisitions is such that investors should still keep an eye on current operations and future.
"The big question for (this) week is who will be next on the front of the stage of mergers and acquisitions. This will be the great history and information that everyone wants to know," says Jud Pyle, chief investment strategist at PEAK 6 Investments.
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