Stock market trying to bounce back

by Associated Press

Published: January 25,2010

Tags: investing, recession, stocks and bonds

NEW YORK — U.S. stocks appear headed to snap their worst losing streak since the market bottomed last March. Futures are sharply higher Monday.

The market is trying to bounce back from a three-day losing streak that saw the Dow Jones industrial average fall 5.2 percent, including a 2.1 percent drop on Friday. Concerns about a new proposal from President Barack Obama to tighten regulation over the banking sector spooked the market and was the main driver of the sell-off.

Overseas markets continued their slide Monday, following the decline in U.S. markets to end last week. Asian shares fell again following concerns about the banking sector. The Bank of China said it plans to rise billions of dollars to replenish capital and meet new government requirements.

Investors will closely be watching Washington throughout the upcoming week for more clues about potential regulatory overhaul. Obama said Thursday he wants to restrict how much big banks can use their own money for trading and limit the overall size of the largest banks. Few other details were provided, leading to uncertainty about how it will affect the market.

A brewing battle over Federal Reserve Chairman Ben Bernanke’s reappointment could also sway trading throughout the upcoming week. Bernanke’s term ends Sunday and a growing chorus of Senators have been pinning the struggling economy on the Fed chairman.

Hearings on Bernanke’s reappointment come at the same time as the Fed will be holding a regularly interest-rate setting meeting. The Fed is expected to hold rates at record lows, so investors will be thoroughly reviewing the statement for signs of economic strength and to try and determine when the Fed might begin to raise rates.

Ahead of the opening bell, Dow Jones industrial average futures rose 75, or 0.7 percent, to 10,226. Standard & Poor’s 500 index futures rose 9.40, or 0.9 percent, to 1,100.40, while Nasdaq 100 index futures climbed 8.75, or 0.5 percent, to 1,806.50.

Investors will receive plenty of economic data and earnings reports throughout the week to help determine how the economy is faring. Thus far, earnings have mostly topped analysts’ expectations. However, unlike in recent quarters that has not helped send stocks higher. Analysts say traders are becoming more particular about specifics within earnings reports, such as future outlooks and revenue growth and not just settling for a better-than-expected profit as a reason to buy shares.

Dozens of earnings reports from nearly all sectors are scheduled for release throughout the week, including Apple Inc., Johnson & Johnson, Amazon Inc. and AT&T Inc.

Reports from the housing market will be in focus throughout the week. The battered sector has shown some signs of recovery, though reports have indicated that bounce back is slow and uneven.

Sales of existing homes likely fell 7.3 percent to a seasonally adjusted annual rate of 6.06 million in December, compared with the previous month. The decline is likely due to the timing of tax credit that was eventually extended.

Buyers last month no longer had to rush to buy homes before the end of the tax credit, which was originally set to expire on Nov. 30. That pushed sales higher in November. The credit was extended and now expires in April.

The report from the National Association of Realtors is due out at 10 a.m. EST.

Additional reports on home prices and sales of new homes are due later in the week.

Meanwhile, bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.64 percent from 3.61 percent late Friday.

The dollar declined against other major currencies, while gold prices rose.

Overseas, Japan’s Nikkei stock average fell 0.7 percent, while Hong Kong’s Hang Seng dropped 0.6 percent. Britain’s FTSE 100 fell 0.3 percent, Germany’s DAX index declined 0.2 percent, and France’s CAC-40 rose 0.2 percent.

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