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Market Insider

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Feb.27

8:30 PM ET

Friday, 27 Feb 2009

Market Insider: Recession the Only Thing Roaring in March

Posted By:Patti Domm

Topics:Banking | Congress | Currencies | Stock Market | Investment Strategy

Sectors:Banks | Oil and Gas

Companies:General Electric | Citigroup Inc

Stocks limp into March at 12-year lows, amid signs the market could still be heading south.

In the coming week, a heavy calendar of economic news, including Friday's jobs reports, will pummel a market used to negative surprises. There are few earnings reports with the exception of AIG [AIG Loading... () ], which is expected to report a $60 billion loss before Monday's opening bell. The company and regulators are in talks this weekend about options for the government-controlled insurance giant.

Berkshire Hathaway releases earnings and Warren Buffett's closely watched investor letter over the weekend.

For Investors:

On Tuesday, Fed Chairman Ben Bernanke goes before Congress for the third time in a week to discuss the federal budget with the Senate Budget Committee. Treasury Secretary Timothy Geithner, who has been keeping a low profile lately, speaks to a House committee on taxes that afternoon.

"There hasn't been a very good track record of late for either one of them, but I will say Berrnake's ability to give detail on the bank rescue plan helped the market Tuesday, but he didn't help Wednesday," said Jefferies managing director Art Hogan.

"We could get another eye-popping bad number and a tick up in the unemployment rate," he said of Friday's jobs report. Economists expect a 675,000 decline in non-farm payrolls and an unemployment rate of 8 percent.

But Hogan said there are signs chain store sales, reported Thursday, might not be as dire as expected. "Some of our stores checks are showing that some stores are actually putting up better numbers—BJ's [BJ Loading... () ], Costco [COST Loading... () ], Kohl's [KSS Loading... () ], Wal-Mart [WMT Loading... () ]. The February checks have actually come out more supportive than we thought," he said. Hogan noted that the pickup in buying is not just in the food category. Auto makers report their monthly sales Tuesday.

Markets Mayhem

The Dow ended February down 11.7 percent at 7,062, giving it a 19.5 percent decline since Jan. 1 and its worst February since 1933. The S&P 500 was down 11 percent for the month, finishing Friday at 735, closing before its November low for the first time. NASDAQ was down 6.7 percent at 1377, its worst February since 2002.

Stocks wilted in the past week as investors worried about the lack of clarity on the banking sector, even with the government's move to raise its stake in Citigroup to near 40 percent. Financial stocks tumbled 7.4 percent Friday but were up nearly 2 percent for the week. The health care sector, a popular safe haven, suffered the most pain with an 11.5 percent decline in the past week after President Obama announced plans to reform health care.

From 'Fast Money':

Are ETFs Distorting the Market?

BlackRock Vice Chairman Bob Doll said the market's behavior is not unexpected in a bottoming process. "We kind of retraced our steps. That's what the bottoming process is about. You build a rally. You give it back. You build a rally. You give it back," he said.

"My message to anybody who will listen is: 'dollar cost average back into sticks,'" he said. "A lot of people with a ton of cash on the sidelines are scared to death...the risk reward is improving is what I'm saying."

Doll said he thinks the market will perform better when there is more clarity about the government's rescue plans for the banking system. "Markets hate uncertainty. We've just had too much of it," he said. "I'd like to see the mark to market rule suspended. That would enable financial institutions begin to come together."

Doll said one area of encouragement would be improving commodities prices. Nymex crude iin the past week gained 11.8 percent to $44.76 per barrel. "It's nice to see oil move from that $35 to $40 range where it's been for a time," he said. Energy is his favorite cyclical group.

"I still t think selective technology stocks, and technology as a whole are doing very well for a recession. I have not changed that view," he said. The S&P technology sector finished the past week down nearly three percent.

CONTINUED : LIBOR GOES 'THE WRONG WAY'

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