Recovery seen for US stocks as trading enters new year
Sunday, 28 December 2008
NEW YORK, Dec 27 (AFP): Battered US stocks enter the New Year next week on expectations of a gradual market recovery as president-elect Barack Obama moves to drag the world's biggest economy out of recession.
The US stock market has risen about 20 per cent from its climactic lows reached on November 21 and "chances that we saw the bottom of the bear have increased because of the massive easing done by the Federal Reserve since then," said Alfred Goldman, chief market strategist at Wachovia Securities.
The Fed had vowed to do whatever it takes to help the economy and the credit markets, as it slashed interest rates to virtually zero two weeks ago to jumpstart the economy from the worst slump since the Great Depression.
Goldman said stock valuation levels were "very attractive" and "the risk of a depression is extremely unlikely," forecasting the recession may end next summer.
"We do know that 2009 will bring a new slate of ideas from a very popular president-elect," he said ahead of Obama's inauguration on January 20 and the prospect of a massive stimulus package by his new administration.
Amid the current gloom of job and spending cuts as well as a credit squeeze, "the seeds are being sown for a modest recovery that we are forecasting to begin in mid-2009," said Stephen Auth of Federated Investors.
"The prospect for eventual better times has led us to raise slightly the risk profile of our model stock-bond portfolio to capitalize on opportunities that arise in the months after the economy bottoms," he said.
In the week to Friday, the Dow Jones Industrial Average, Wall Street's benchmark index, fell 0.74 per cent to 8,515.55 following a 0.59 per cent drop the previous week.
The US stock market has risen about 20 per cent from its climactic lows reached on November 21 and "chances that we saw the bottom of the bear have increased because of the massive easing done by the Federal Reserve since then," said Alfred Goldman, chief market strategist at Wachovia Securities.
The Fed had vowed to do whatever it takes to help the economy and the credit markets, as it slashed interest rates to virtually zero two weeks ago to jumpstart the economy from the worst slump since the Great Depression.
Goldman said stock valuation levels were "very attractive" and "the risk of a depression is extremely unlikely," forecasting the recession may end next summer.
"We do know that 2009 will bring a new slate of ideas from a very popular president-elect," he said ahead of Obama's inauguration on January 20 and the prospect of a massive stimulus package by his new administration.
Amid the current gloom of job and spending cuts as well as a credit squeeze, "the seeds are being sown for a modest recovery that we are forecasting to begin in mid-2009," said Stephen Auth of Federated Investors.
"The prospect for eventual better times has led us to raise slightly the risk profile of our model stock-bond portfolio to capitalize on opportunities that arise in the months after the economy bottoms," he said.
In the week to Friday, the Dow Jones Industrial Average, Wall Street's benchmark index, fell 0.74 per cent to 8,515.55 following a 0.59 per cent drop the previous week.