Dubai, Jobs in Focus for Coming Week

Updated from 11/28/09

Update includes news that the United Arab Emirates' central bank will offer additional liquidity to banks.

NEW YORK (TheStreet) -- The Dubai debt debacle is likely to take center stage at the start of next week, when more active trading will show whether Friday's selloff was exacerbated by light volume at the end of a holiday week, or whether the market is truly spooked.

Dubai World, the investment arm of the Middle Eastern state of Dubai, has asked creditors to defer at least $60 billion in debt repayments for at least six months with some reports putting the number as high as $100 billion. Its apparent inability to make good on its debt was reminiscent of the Lehman Brothers failure that further froze the credit markets and pushed the stock market into a downward spiral in 2008.

On Friday, investors chopped off over 150 points, or 1.5%, from the Dow Jones Industrial Average, following selloffs in the Asian and European markets. The market is still up significantly from its lows earlier this year, with the Dow closing at 10,309.92 on Friday, 60% better than the depths of March. The broader S&P 500 Index closed down 1.7% on Friday at 1,091.49, but is still up 64% from its March low.

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Rochdale Securities analyst Richard Bove said the impact to U.S. banks, such as Bank of America (BAC Quote), JPMorgan Chase (JPM Quote), Citigroup (C Quote), Wells Fargo (WFC Quote), Goldman Sachs (GS Quote) and Morgan Stanley (MS Quote) is likely to be "minimal." But he added that, given the interconnectivity of the global financial markets, the resolution of this debt issue needs to come quick.

"Now the great game of 'chicken' is underway to see who will feel the pain the most if Dubai fails," Bove said in a report on Friday. "The likely result is that the Arab states will come together to protect Dubai but that the city-state will be made to suffer. However, if this takes months there will be financial upset everywhere."