Wall Street, still wracked by the eurozone crisis, has a long holiday weekend to recover from a miserable May before facing a packed economic calendar capped by the monthly jobs data.
“There’s been a spike of jitters, but sellers are a bit worn out,” Gregori Volokhine of Meeschaert New York said.
The market “is stabilizing. Volatility remains high, but no longer at crisis levels,” he said. “The crisis of confidence in the market is over.”
Over the past week, the blue-chip Dow Jones Industrial Average fell 0.56 percent to 10,136.63 ponts. By contrast, the tech-rich NASDAQ composite gained 1.26 percent to 2,257.04 and the Standard & Poor’s 500 index, a broad measure of the general market, edged up 0.16 percent to 1,089.41.
The Dow has plunged 7.9 percent this month, its worst monthly performance since February last year and its worst May since 1940.
The week got off to a rocky start as investors continued to fret about the developing financial crisis in the eurozone after Greece’s close call with collapse.
Attention focused on Spain, where the central bank rescued a regional savings bank, CajaSur.
The fiscal strains in the eurozone sparked concerns that they could morph into a global financial crisis like the one that followed the 2008 bankruptcy of US investment bank Lehman Brothers.
A huge blow came on Wednesday, when the Financial Times reported shortly before the market closed that China, the world’s largest holder of foreign-exchange reserves, was reviewing its eurozone debt holdings.
The euro plunged below US$1.22, near a four-year low, and the Dow closed below the psychologically sensitive 10,000-point threshold for the first time since early February.
China dismissed the report on Thursday, easing eurozone fears and sending the Dow up 2.85 percent.
On Friday, Fitch cut its credit rating on Spain, sending the market plummeting before it fought back to close off intraday lows.
Despite the whipsaw action, “this week has been far more healthy than we have seen in the last three or four weeks,” Marc Pado at Cantor Fitzgerald said.
“A big part of this decline was to unwind positions that were representing higher risk for portfolios,” he said.
“When you bounce it’s important that the right stuff bounces: technology, retail, financial, those are the drivers of the economy, and that’s what started to happen,” Pado said.
After the May maelstrom, investors have a long weekend — with markets closed tomorrow in observance of the US Memorial Day holiday — to catch their breath.
They face four days of key economic indicators, including construction spending on Tuesday, auto sales on Wednesday and factory orders the following day.
But key labor data on Friday promise to stir the most interest as investors try to gauge the sustainability of the fledgling recovery from the worst recession since the 1930s.
Most analysts expect the Labor Department to report nonfarm payrolls rose 500,000 this month, after a gain of 290,000 last month.
The expected jump in job creation would be largely due to temporary government hiring for this year’s census, analysts said.
The unemployment rate was forecast to slip a notch, to 9.8 percent, from 9.9 percent.
“We’ve had slightly more mixed data recently, so the jobs figure will be the test to see the strength of this economic recovery,” Volokhine said, adding that “there’s always a risk of bad news” from Europe.
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