It is the final week for stock market in 2011 and analysts are expecting a quiet time in the market. Most market players, traders and investor took time off and extended their Christmas weekend to a lazy Monday. The stock markets were closed on Monday and will resume trading from today on a normal schedule.
There are four days left for the New Year to arrive and to determine if the major indexed end with a red or a black underline as 2011 passes away. Many great investors have already balanced and closed out their books for this year.
Paul Edelstein and Nigel Gault, economists at IHS Global Insight mentioned in their note to the clients, “Equity markets have one last chance this coming week to end the year in the black.”
The signs of improvement in the economy of U.S., along with turn down in the jobless benefit claims and a rise in new home construction have unanimously supported stocks in 2011. The deal between the congresses to extend the payroll cuts for another two months was also welcomed by the investors with open arms. This ended the heated political stalemate in the Senate House.
Last week saw the Standard & Poor’s 500 Index inching back into positive territory for 2011. There is also a rise noticed in the Dow Jones Industrial Average pushing it up 6.2 percent in the last week of the year. However, there are always ups and downs in the trading market and the tech-heavy NASDAQ is down 1.3 percent with just a few trading days left.
But, that’s nothing new for the market picture. In times that have gone by, trading volume has usually been light at this time of year. Nevertheless, the traders who are still stuck in the market, hunting for trade in the last week of 2011, have a few economic reports which would help them make their investment choices.
But what concerns the analysts and leaders is the eurozone debt crisis. Analysts and leaders say that the market is still vulnerable to another sell-off if the debt crisis in Europe takes a turn for the worse. This big concern has been the case for quite some time. It is feared that the eurozone government debt problems could transform into a banking crisis flowing across the global financial system, crunching the euro currency union into pieces.
Europe has been the main culprit of the eurozone debt crisis ever since at September, infecting smaller countries like Italy, Spain, Greece, Ireland and Portugal by the eurozone debt crisis that has further rippled to affect the whole world.
Even though there have been steps taken toward a new intergovernmental agreement to balance national budgets and prevent member states from spending beyond their means by the Eurozone leaders, it is essential for the U.S. and other markets to remain on the edge as they step into 2012. It is required for the markets of the globe to maintain this pattern till the eurozone debt crisis reaches a solution and shows signs of improvement.
Robert Tipp, chief investment strategist at Prudential Fixed Income said, “Markets are in a holding pattern until we see whether the European sovereign situation can continue on its newfound improving course through first quarter. That will be the real litmus test.”