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Saturday, September 22, 2012

Wall Street Takes Breather After Two-Week Rally

U.S. stocks tally first weekly drop in three
Dow falls 0.1% week-on-week

U.S. stocks on Friday finished nearly unchanged, giving Wall Street its first weekly drop for September.

“After having two explosive weeks to the upside, where the S&P 500 was up 3.5%, it’s a huge victory to come out this week virtually flat in the face of the concerns we have: the Middle East, the fiscal cliff and more bad news than good in the economic data stream,” said a senior equity strategist.

“The tug of war between economic fundamentals and central-bank easing is more balanced this week after central banks dominated over the past eight weeks,” noted another as what he termed as a  “glaring market divergence” that has been going on all week culminated Friday with the Dow transportation index DJT -1.03%  breaking to its lowest level since Aug. 2 and to its lowest close since early June.
The Dow Jones Industrial Average DJIA -0.13%  fell 17.46 points, or 0.1%, to 13,579.47, leaving it down 0.1% from the week-ago close.
"Financial stocks are expected to have the best growth rate, compared with large reported losses last year. Earnings for the sector are expected to grow by 9.9%, with American International Group Inc. AIG -0.09% and Goldman Sachs Group Inc. GS +0.21%expected to be the largest contributors."
"The outlook  doesn’t bode well for a market that’s at multi-year highs and will soon be facing added volatility as the November elections and the January “fiscal cliff” come closer."
"Third-quarter revenue for companies in the S&P 500 is expected to rise by 0.1% from a year ago. Energy company revenues are forecast to fall 16.3% and materials by 2.8%, according to FactSet. Much of that stunted revenue growth comes from weak economies in Europe, less favorable foreign exchange rates, and slowed growth in such emerging markets as China."

"After last week's QE3 announcement and market surge, it was pretty obvious that we were overbought on a short-term basis. Well, we got the breather and the market pretty much grinded sideways each and every day this week. With almost no earnings and little economic data, today's market didn't have too much to digest." 

"The end is finally here and we can finally pull the plug on this comatose week of market action. We are still a couple of weeks away from earnings season, but we may start to see some warnings and pre-announcements coming next week."

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