U.S. stocks could struggle to make headway next week if a meeting of European finance ministers fails to reassure markets that they can contain Greece’s debt problems.
Greece’s financing problems have focused investors’ attention on the growing mountain of public debt as cash-strapped governments around the world spend their way out of recession. The fear is Greece’s problems could spread, hurting financial markets.
Finance ministers from the euro zone will meet on Monday, when U.S. markets are closed for the Presidents Day holiday, followed by finance ministers from the rest of the European Union on Tuesday.
«What the market wants to hear is that there is a viable remedy,» said Quincy Krosby, market strategist with Prudential Financial in Newark, New Jersey.
«The market will be anticipating how other problems will be handled. Can the solution be applied to the problems that may crop up in Spain, Portugal, Italy (and Ireland) because traders believe the aftershocks are not over.»
While international headlines continue to grab investors’ attention, the plight of the U.S. economy has taken a back seat. That may change during the week with a government report on housing starts as well as the latest industrial output figures on Wednesday.
For the week the Dow industrials .DJI and the S&P 500 rose 0.9 percent, while Nasdaq .IXIC added 2 percent. Still, the broad-based S&P 500 is now down 6.5 percent since hitting a 15-month closing high on January 19.
Some U.S. investors have been comparing Greece’s debt woes to the bankruptcy of U.S. investment bank Lehman Brothers, which sent markets into a tail spin in September 2008.
European government sources have been sending mixed signals to markets, suggesting a lack of consensus about how to prevent Greece’s debt problems from ballooning. One source said the region’s finance ministers were unlikely to put together an aid package next week.
Source: www.reuters.com.
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