Stocks may fall anew on recession fears
NEW YORK (Reuters) - Stocks could face a further pounding next week as evidence mounts that the economy has entered a recession and problems in the financial sector accelerate.
Next week's economic agenda is relatively light, until Friday, when the Consumer Price Index will command attention, especially with oil's jump this week to a record over $106 a barrel and the surge in other commodity prices.
But anxiety about inflation will take a back seat to the recession fears rippling from Wall Street to Main Street after Friday's government report showed employers cut payrolls for a second straight month.
At the same time, the financial sector has been pummeled by news showing further signs of troubles related to the subprime mortgage market.
For one, concern about the survival of Thornburg Mortgage Inc TMA.N increased on Friday after the mortgage lender said it has $610 million of margin calls outstanding as of March 6, an amount exceeding its available liquidity.
The negative news trend is showing few signs of letting up, and could mean further losses for stocks.
"The sentiment right now is extremely bad," said John Praveen, chief investment strategist at Prudential International Investments Advisers LLC in Newark, New Jersey.
"On the economy side, today's numbers on the labor market probably confirm the U.S. is in a recession," he said, though he added that much uncertainty still exists on the subject.
"On the credit side, we're seeing further stress on mortgage tightening and fallout from that," Praveen said.
S&P 500 WITHIN BEAR'S REACH
Stocks ended lower on Friday and notched their second straight week of losses.
The S&P 500 .SPX is now off about 17 percent from its record closing high set back in October, a drop that puts the benchmark gauge a shade away from crossing a threshold that market technicians consider to be the onset of a bear market.
On Friday, the Dow Jones industrial average .DJI fell 146.70 points, or 1.22 percent, to end at 11,893.69. The Standard & Poor's 500 Index .SPX slid 10.97 points, or 0.84 percent, to 1,293.37. The Nasdaq Composite Index .IXIC dropped 8.01 points, or 0.36 percent, to 2,212.49.
For the week, the Dow lost 3 percent, the S&P 500 shed 2.8 percent and the Nasdaq declined 2.6 percent.
HOPES FOR A FED RESCUE Continued...
