Wall Street heads into a key corporate earnings season with sentiment hammered amid a record surge in energy costs that has dampened prospects for an economic recovery.
In the holiday-shortened week to Thursday, the Dow Jones Industrial Average shed 0.51 percent to 11,288.54 ahead of the July 4 US Independence Day holiday. The blue-chip index was pounded last month with a 10.2 percent loss.
The tech-dominated NASDAQ lost 3.04 percent for the week to 2,245.38 while the broad-market Standard & Poor’s 500 index shed 1.21 percent to 1,262.90.
The Dow and NASDAQ are now firmly in “bear market” territory, down more than 20 percent from their highs from last October, with the S&P not far off.
While many analysts say the market is oversold due to poor sentiment, few see any catalysts that could spark a quick rebound.
The first test comes in the upcoming week with quarterly results from General Electric, seen as a barometer of the overall economy, and key manufacturers including Alcoa and chipmaker Intel.
Marc Pado, analyst at Cantor Fitzgerald, said the market will be on edge from results later in the month from the banking sector, which has been whipsawed by the national housing meltdown and the related credit squeeze.
“Until we get those banks out of the way, the market isn’t going to pay too much attention to other companies’ earnings,” he said.
“It really needs to see where we stand with the credit crisis first and then they’ll focus on the industrials, the retailers, the technology firms.”
But even with positive corporate news, Pado said the leap in oil prices could prevent any rally from taking hold.
“When crude climbs and makes records every day, the market cannot focus on the economic news or anything else,” he said.
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