(Updates column published Friday with NATO commander's comments
Sunday about Russia, Ukraine and Moldova)
By Caroline Valetkevitch
NEW YORK, March 23 The prevailing trend in U.S.
stocks could be higher this week if investor anxiety eases over
the crisis in Ukraine and signs of weakness in the U.S. economy.
Investors will watch for further signs that poor weather
may have played a role in a recent string of tepid economic data
and dampening profit outlooks, which would underscore views that
setbacks may be temporary.
Federal Reserve Chair Janet Yellen's comments, which raised
the possibility last week of an earlier-than-expected increase
in interest rates, added another element of interest to the
U.S. consumer confidence and sentiment are among the
economic indicators due this week, along with new home sales and
orders for durable goods.
The market, however, remains vulnerable to any escalation in
global tensions over Ukraine, especially since the Standard &
Poor's 500 reached another intraday record high on Friday
before ending lower after a bout of profit-taking.
"The trend is favorable unless it's upset by world events,
and weakening of the data both here and abroad," said Bucky
Hellwig, senior vice president of BB&T Wealth Management in
"I would say right now, if you look at the scorecard of
economic and global events, it looks a little better than it did
a month ago."
Stocks bounced back this week after losing more than 2
percent the previous week as the problems in Ukraine and worries
about a slowdown in China curbed investors' appetite for riskier
The S&P 500 ended the past week up 1.4 percent, its best
weekly gain since February. For the year, the benchmark index is
up about 1 percent.
President Vladimir Putin signed laws completing Russia's
annexation of Crimea on Friday as investors took fright at a
U.S. decision to slap sanctions on his inner circle of money men
and security officials.
NATO's top military commander said on Sunday that Russia had
built up a "very sizable" force on its border with Ukraine and
Moscow may have a region in another ex-Soviet republic, Moldova,
in its sights after annexing Crimea.
The Fed was in focus last week, when the central bank made it
clear it would rely on a wide range of measures in deciding when
to raise interest rates, dropping the U.S. unemployment rate as
its yardstick for gauging the economy's strength.
"You just have so much indecision. Do you feel good about
what Janet said? Do you feel bad? Do you feel good about the
Ukraine? Do you feel bad?" said Drew Wilson, an analyst at
Fenimore Asset Management in Cobleskill, New York.
"It just feels like you have a hard time getting momentum
WALLETS AND WARNINGS
Investors will get some information this week on whether
consumers kept a tight grip on their wallets last month. The
Commerce Department will release February data on U.S. personal
income and consumption on Friday. Economists polled by Reuters
have forecast slim gains from the previous month.
A final reading on fourth-quarter Gross Domestic Product
will be released on Thursday.
"Hopefully some of the data is beginning to clear itself
from some of the weather impacts, and we may get some better
readings on how things are going," said Cam Albright, director
of asset allocation at Wilmington Trust Investment Advisors.
Negative profit outlooks for the first quarter have been
increasing as well, with more companies sounding the alarm about
possible problems related to this winter's harsh weather.
Among them was General Mills, which missed sales and
profit expectations last week and has warned about the current
quarter. Its CEO said "severe winter weather dampened sales
performance across the food industry."
Thomson Reuters data showed that 108 negative outlooks have
been issued by S&P 500 companies so far, compared with only 16
But the ratio of negative outlooks to positive ones remains
below that of the fourth quarter, which was the worst since at
least the first quarter of 1996, according to Thomson Reuters
BANKING ON DIVIDENDS
Among stocks likely to post further gains are financials,
which climbed following Yellen's comments last week. She
indicated that the first increase in interest rates could come
in the first half of next year.
Most analysts in a Reuters poll after the Fed chair's
remarks, however, still did not expect the central bank to begin
raising rates until the second half of 2015.
Another supportive element for banks came from the Fed after
Thursday's close, when the central bank said 29 out of 30 major
banks met the minimum capital hurdle in its annual health check.
The S&P financial index gained 4.3 percent for the
week, its best weekly percentage increase since January of 2013.
In the coming week, the Fed will announce on Wednesday which
banks' plans to pay dividends or buy back shares were approved.
"Regulators will sign off on the dividend increases, and if
they get approved, that will help the momentum in the financial
stocks," Hellwig said.
(Wall St Week Ahead runs every Sunday. Questions or comments
on this column can be emailed to:
(Editing by Jan Paschal; For the daily stock market report,
please click )