Updated from 06/05/10
Update includes G20 announcement, the nonviolent capture of an aid ship headed to the Gaza Strip and BP's success at capturing some of the oil gushing from its Gulf of Mexico well.
NEW YORK (
) -- With only a small sliver of economic figures to interpret and a lack of significant earnings reports to digest, several market experts say they will be focusing chiefly on headline risk and the euro in the coming week.
And, oh yes, there are risks aplenty around the globe.
In what's fast becoming a broken record, some say they'll continue watching for any new development out of the eurozone. The story is all too familiar by now. Fears of a spreading sovereign debt contagion, along with a battered euro, have stifled stocks for the past few weeks. Headline risk popped up again Friday after
Hungary became the newest entrant into the hexed club of European nations announcing its economic foibles.
"What's going to calm people down is fewer headlines," said Fred Dickson, chief market strategist at DA Davidson & Co. "The European Union and sovereign governments literally have to keep working away at addressing the very extended, highly leveraged situation that their governments and their banks find themselves in. This is probably going to be at best a multimonth, but most likely a multiquarter problem."
Over the weekend, G20 finance chiefs meeting in South Korea
acknowledged recent market volatility and stressed the need for curbing government deficits
Still, in the mind of Wells Capital Management's Jim Paulsen, Europe was taking a backseat to next week's initial claims data because he sees market fear more than foundational issues driving negative sentiment toward the eurozone. But that hysteria could become its own self-fulfilling prophecy, with market fears driving increasing sovereign borrowing costs.
"I'm not as riled about the fundamental problems in Europe. I don't know if the fundamental problems are that great. I think it's more of a market panic that's really at the heart," said Paulsen, who serves as chief investment strategist at Wells Capital. "I think there's decent odds that it winds down. But, the longer it burns, the longer it smolders, the more the panic elevates, it can create its own fundamental problem. If it truly does freeze up interbank lending, then we're going to have a real fundamental fallout on Main Street. I have concerns about it. We were given an example in 2008. But, to me, it's very different than the toxic debt, subprime mortgage problems in the United States."
> > Bull or Bear? Vote in Our Poll
Many will be eyeing escalating tensions out of the Middle East as well, although a cargo ship carrying pro-Palestinian activists was taken to an Israeli port Saturday without any violence.
Others, still, will be looking for any information out of the Korean peninsula, where North Korea and South Korea have been embroiled in an intensifying spat over the sinking of a South Korean warship.
Then there's the steady drumbeat of anger and outrage about the Gulf of Mexico, where
and other officials struggled to control what's now the worst offshore oil calamity in U.S. history.
After repeatedly failing to stop or control the gushing well in the Gulf of Mexico, BP reported some success over the weekend with its latest approach, a containment cap. The oil company said the cap
collected 420,000 gallons of oil
in one 24-hour period. However, it remains uncertain when BP will be able to gather all new oil leaking from the well, as officials estimate that up to 1 million gallons of oil are spewing from the well each day.
All of which sets the stage for more trading volatility, highlighted by participants staring at key technical levels at every step.
"I think these geopolitical events in North Korea, Europe, they're going to continue to dominate the news. But the good thing there is, I think, it's creating a decent amount of buying opportunity for domestic stocks," said Ken Roberts, principal at Harbor Lights Financial. "I think these things, while they're important no question about it, the fundamentals of our economy are ultimately going to be the driver of our market. And the fundamentals, right now, remain pretty good."
Dow Jones Industrial Average
plunged 323 points Friday, or 3.2%, to finish at 9,932 after a bafflingly bad
May jobs report hit the market with a thud. Though the nation's employers added 431,000 jobs to payrolls last month, nearly all of it came from census hiring. So if any economic report is to get attention next week, look for the government's weekly initial jobless claims data, scheduled for release at Thursday at 8:30 a.m. EDT, to be at the top of the list. Claims have stalled over the past few months. Early estimates are forecasting new claims will fall by 3,000 to 450,000 in next week's report, according to consensus numbers provided by
"I think if claims numbers head towards 400,000, you'll watch Europe concerns wind down," Paulsen said.
But don't look for other fundamental figures to be completely cast aside next week. May retail sales and June consumer sentiment figures will probably garner investors' attention Friday morning after
retailers reported uninspiring May sales numbers on Thursday.
so-called Beige Book -- an anecdotal, region-by-region assessment of the country's economic conditions, which often sets the stage for the June policy-making meeting of the Federal Open Market Committee -- will be released Wednesday afternoon. Reports surveying wholesale and business inventories, trade statistics, consumer credit and the federal deficit will also come due next week.
No real eye-popping names will be reporting earnings. Among the rest,
are on tap.
Investors will also be looking for
to bounce back in its fourth-quarter report due Thursday, from a loss of 28 cents a share a year-ago to a profit of 28 cents a share.
-- Written by Sung Moss in New York