Another volatile week marked

Greece, growth worries keep cap on Wall Street

GMT 03:35 2015 Saturday ,30 May

Arab Today, arab today Greece, growth worries keep cap on Wall Street

Another volatile week marked over US growth rebound and Greece's debt talks
New York - Arab Today

Another volatile week marked by distrust over the US growth rebound and Greece's debt talks prevented US markets from locking in recent record highs.

Tech stocks brooked most of the selling pressure, with the Nasdaq Composite scoring a fresh record Wednesday, but investors mostly saw more to worry about than reason to push ahead.

That included a mix of economic data -- strengthening in the housing market but weaker consumer sentiment and a downturn in business activity in the Chicago area -- that failed to show a clear break with the 0.7 percent economic contraction of the first quarter.

In addition, after repeated hints and then denials that a deal between Greece and its "troika" creditors on new financing was near, the market week ended without a pact to give Athens more funding that would allow it to service its debts.

Many took to heart the remark by International Monetary Fund chief Christine Lagarde that an exit by Greece from the eurozone is "a potential." That carried with it the implied default on payments owed to the IMF and European Central Bank, and more turmoil for the euro.

"The fact that Lagarde yesterday indicated that there is the potential for Greece leaving the eurozone, that's on the mind on investors, and ahead of the weekend, this is causing this decline," said Peter Cardillo of Rockwell Global Capital.

For the week, the Dow Jones Industrial Average lost 2.21 percent to 18,010.68 points.

The broader S&P 500 slipped 0.88 percent to 2,107.39. And the Nasdaq, which closed at a record 5,106.59 on Wednesday, also completed the holiday-shortened week down, giving up 0.38 percent to 5,070.03.

Even so, at those levels, stocks were still within sight of their record highs.

Wall Street showed its enthusiasm for more giant mergers during the week: Charter Communication's $78.7 billion deal to buy Time Warner Cable, and chipmaker Avago Technologies' $37 billion takeover of Broadcom, the largest tech sector deal since the dot-com boom.

- Confidence 'nibbled into'  -

But the economic data and Greece worries overrode that fervor.

"The week started on an optimistic note... but the data over the course of the week has really nibbled into that confidence," said Chris Low of FTN Financial.

After the first quarter contraction, he said, "it's difficult to believe in a rebound when we continue to see weakness in April and May."

A slew of fresh data on May coming out in the next week, including the jobs report and auto sales, could change that view if the numbers come in good.

Tom Cahill of Ventura Wealth Management said the possibility that Greece would not strike a deal with official creditors for more funding and would default on its debt keeps investors on edge.

"Last time there was concern about Greece, it was problematic for the US stock market," he said.

But Cahill also added that Wall Street shares are priced on the high side now, and earnings growth has slowed.

"The US has had a good run since 2009. Valuations are probably on the higher side of fair value, if not slightly overvalued."

But he added that the ability of investors to shift from one market to another keeps some of the froth off of US stocks.

"As global investors, the lifeblood of a bull market is that we can look from one market to the next. The US market seems to be getting better and stabilizing, so that's good."
Source: AFP

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