This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Europe Elections, Jobless Claims in Focus for Coming Week

NEW YORK ( TheStreet) -- The French presidential election will get plenty of digital ink on Sunday, but it may not have much of an impact on U.S. markets in the coming week because Wall Street likely has priced in the expected victory of Francois Hollande over Nicolas Sarkozy.

What's more likely to roil equities is the drama at the polls in Greece, where the population is frustrated with both the socialist and conservative parties.

"That's why the Greek election is more important for the market, because what you may see is a template in Greece of citizenry just basically saying we don't want this austerity," said Quincy Krosby, Prudential Financial market strategist.

Brian Lazorishak, portfolio manager and quantitative analyst at Chase Investment Council, agreed that the market has already factored in a loss by Sarkozy, a development that complicates how the eurozone deals with its sovereign debt troubles because it's not clear how Hollande and German Chancellor Angela Merkel will work together.

"I think the French election is something people are talking about a little," Lazorishak said. "I'm not sure what kind of impact that will have on the U.S. markets. Certainly it's having one on Europe."

> > Bull or Bear? Vote in Our Poll

The major U.S. equity indices just endured their worst week of the year. The big blow came on Friday when the April employment report came in weaker than expected, showing that only 115,000 jobs were created during the month. Investors are worried about a repeat of the last two years when stocks peaked in the spring.

The Dow Jones Industrial Average fell 1.46%, or 192.62 points, this week, closing on Friday at 13,035.77. The blue-chip index has risen 6.7% year to date.

The S&P 500 dropped 2.21%, or 30.9 points, to close this week at 1,369.08. Year to date, the index has risen 8.86%.

The Nasdaq Composite lost 3.49%, or 106.8 points, to close on Friday at 2,956.34. The index has climbed 13.48% year to date.

Even though the French election may not weigh very much on the U.S. markets, it will bring Europe back into the forefont of investors' minds after they had a sharper focus this week on US. economic news, Lazorishak added.

"If there's nothing better to trade on in the market, it trades on Europe," Lazorishak said, noting that in the absence of meaningful U.S. economic data or earnings, the market's focus will be on Europe.

The bigger pieces of economic data next week are the producer price index and the University of Michigan read on consumer sentiment, both of which come out on Friday.

The producer price index was flat in March, and the consensus is calling for more of the same in April, according to Thomson Reuters. Last month's consumer sentiment report was revised to 76.4 from the first reading of 75.7. Economists surveyed by Briefing.com expect the survey to tick down to 76.2.

Krosby will be watching Thursday's initial jobless claims report, in particular the four-week moving average. She said that, "especially after [Friday's] number, you want to see the data get better or get materially weaker to have the Federal Reserve show its hand. We have mixed data right now."

Initial jobless claims are anticipated to come in at 365,000, according to Briefing.com.

Another area that Krosby will be watching next week is the 10-year and 30-year Treasury bond auctions. She's been keeping an eye on the 10-year yield because "it's disconcerting that the market is going higher, but it's not being confirmed by the 10-year yield. That's telling us that investors still believe the economy is slowing."

This week marked the start of trading in May, and the old adage "Sell in May and go away" got lots of play. Krosby thinks that there may be some selling happening in May, but it's a little different this time around.

"It's not because of the calendar, but it's more to do with the data," she said. "And it has more to do with the Fed and the notion that things get bad and Bernanke has said the Fed will be more accommodative. It makes it hard to sell in May and go away when the Fed may come in with the June meeting maybe and offer the market more accommodation. You don't want to be out of the market when the Fed is going to be helping to stimulate market activity."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $126.60 0.94%
FB $86.91 1.34%
GOOG $521.88 0.26%
TSLA $269.07 0.30%
YHOO $39.33 0.10%

Markets

DOW 17,757.91 +138.40 0.79%
S&P 500 2,077.42 +14.31 0.69%
NASDAQ 5,013.1230 +26.2560 0.53%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs