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Market Insider: Friday Look Ahead

Thursday's wild action could draw some buyers into the stock market Friday.

But traders warn it could be another volatile day, and there will certainly be investors who use Thursday's gains to take profits.

Before the bell, Fed Chairman Ben Bernanke speaks in Frankfurt, Germany, starting at 8:30 a.m. Bernanke will participate in a panel discussion with European Central Bank President Jean-Claude Trichet on "International Interdependencies and Monetary Policy." Meanwhile, in Washington, leaders of G20 countries gather for a summit on the global financial crises.

Economic news Friday includes retail sales for October and import prices, reported at 8:30 a.m. Business inventories and consumer sentiment are released at 10 a.m.

J.C. Penney and Abercrombie and Fitchreport earnings, following a string of disappointing retailers' reports this week. Both Nordstrom and Kohl's issued warnings when they reported sharply lower earnings after Thursday's bell.

Markets Mayhem

Stocks Thursday made a 10 percent intraday journey from trough to peak before finishing with a nearly 7 percent gain. The Dow finished up 552 points at 8835, and the S&P 500 was up 58.99 at 911.29, again of 6.9 percent. Just after midday, the S&P fell through the closely watched 839 level reached on October 10. As it sprang back, the entire market moved higher.

"The breakdown through the old lows in the S&P could cause capitulation," said Tim Smalls of Execution LLC.

"When they reversed, I think that was a big part of it (the rally)," said Smalls. " As soon as they broke the low on the S&P, but held the low on the Dow, a lot of people put some money in."

"It was also more that the selling stopped than that the buying started. If you look at the intraday volumes, they were not huge to the buy side until this afternoon," he said. Smalls said it seems a lot of the selling from hedge fund redemptions expected this week may have already happened. Investors in many hedge funds must request withdraws for year end by Saturday.

Traders said the tone of President Bush's economic speech mid afternoon was viewed as a surprising positive by the market. On the eve of the G20 meeting, where the idea of a global financial regulatory structure will be discussed, he warned about too much regulation of financial markets.

G20something

Generation Y will be at the table for the first time this weekend when G20 gathers in Washington. There is something, clearly historic, but also sobering about the idea of the leaders of 20 nations, developed and developing, gathering to discuss a financial problem that could only have become as deep and entwined by the rapid globalization of the last 20 years.

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The BRIC countries - Brazil, Russia, India and China - met ahead of the meeting and issued a joint position calling for reform of institutions like the International Monetary Fund to reflect the growing importance of developing economies.

Robert Hormats, vice chairman of Goldman Sachs International, will appear on "Squawk Box" Friday, but in a phone interview ahead of that he said he doesn't expect any major action on a new global financial regulatory architecture. But he does see the group launching working groups that will tackle the ideas of financial markets regulation and transparency, among other issues.

"It underscores the fact that countries recognize the need to develop harmonious approaches to addressing this crisis and that is a huge difference between now and the 1930s when, as you may recall, many countries engaged in a whole series of beggar thy neighbor policies," such as protectionism and harmful exchange rate moves, he said. "By these harmful actions, they made the depression a whole lot worse than it might otherwise have been."

Significant, too, is that the developing nations have equal seats at the table, along side G7 countries. Those countries have a big stake in the outcome and will work to be part of the solution. "If there is conflict among countries in the way they address this, it will badly undermine the resolution process and make troubled markets that much more traumatized," he said.

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Financial markets are not pinning much hope on any major outcome of the meeting, but there are expectations that this is the first in a series of meetings. "This is really the launch of something that's going to continue into the next Administration and that's why nothing concrete can be agreed on, but that's not bad," he said.

Hormats also expects the IMF to play a bigger part in the global crises than would have been expected several months back. CNBC's Steve Liesman reported Thursday that one development from G20 may be that creditor nations, like China and Saudi Arabia, could pledge hundreds of billions of dollars to support aid programs for countries hurt by the credit crises. An IMF source told Liesman this would supplement IMF resources.

"Several months ago, it was fashionable to say the IMF was moribund, doing nothing. It ain't so now," Hormats said. He pointed to the recent announcement by IMF that it would provide liquidity to countries that have sound policies but have problems stemming from the credit crises. "They are playing a more important role. One constructive objective of this meeting would be to help support them in that role, which means more resources, but it also means adjusting their role so that they can do a better job ... They never played this role in terms of providing liquidity."

IMF was formed out of the 1944 Bretton Woods conference, as was the World Bank. This weekend's summit is being billed as a second Bretton Woods, but clearly one month of planning ahead of this meeting will not produce the results that were two years in the making in the 1940s.

Questions? Comments? marketinsider@cnbc.com

  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

  • CNBC's Senior Personal Finance Correspondent

  • JeeYeon Park is a writer for CNBC.com. Follow her on Twitter: @JeeYeonParkCNBC

  • Rick Santelli joined CNBC Business News as an on-air editor in 1999, reporting live from the floor of the Chicago Board of Trade.

  • Senior Producer at CNBC's Breaking News Desk.