Brendan Mcdermid / REUTERS
Traders work on the floor of the New York Stock Exchange Monday.
By Roland Jones, NBC News
Europe?s debt crisis, the fiscal cliff and persistently high unemployment -- the stock market has had a raft of troubles to grapple with lately.
Can stocks get over these issues and move higher?
Stocks took a tumble Monday, tracking global equity markets sharply lower, as traders worried that Spain could eventually be shut out of public markets and forced to seek a sovereign bailout in the same manner as Greece, which itself may be approaching an exit from the eurozone.
By the close of trading, the Dow Jones industrial average was down 101 points, recovering from a loss of as much as 239 points sustained just after the opening bell.
Julian Callow, chief European economist at Barclays Capital in London, reckons the outlook for stocks won?t look much brighter until Europe?s troubles are resolved.
That doesn?t look too likely at the moment, he added.
?Things are not going to look a lot better for the financial markets until we start to see some improvement coming through in the business cycle here in Europe,? Callow told CNBC. ?And I really struggle to see much evidence of that right now.?
The broader market, as measured by the Standard & Poor?s 500-stock index, is down 5 percent since hitting a high for the year on April 2, and if the spring-and-summer swoon is giving you a tingling sense of d?j? vu, you?re not imagining it.
The stock market is starting to follow the same pattern as 2011. Stocks began the year well, but faltered in the spring and summer as the economy started to show signs of weakness.
Unfortunately, if the 2011 patterns holds for the rest of 2012,?the market?is likely to drop 20 percent from its recent high amid massive recession fears and on the back of fears about Europe?s debt crisis.
?There?s a lot of talk about us going through what we went through last year, and the script is close,? Jim Paulsen, chief investment strategist at Wells Capital Management, told CNBC Monday.
?But I think we?re very different this year,? he added. ?We could stay sloppy here for a while, but I still think the U.S. is going to exit this soft patch and the market has a good run to new highs here before the year is out.?
A persistent fear about the state of the economy is weighing on some investors. The nation?s unemployment rate held at 8.2 percent in June, and it has remained above 8 percent since February 2009.
Last week, Federal Reserve Chairman Ben?Bernanke told lawmakers at a hearing that progress in reducing the nation?s unemployment rate may be ?frustratingly slow? and added that the central bank is ready to take further action to bolster the recovery.
Bernanke also raised the issue of the so-called ?fiscal cliff? -- tax increases and government spending cuts that are supposed to start in 2013 and could push America into recession if they are not addressed.
With corporate earnings season is full-swing, companies are reporting solid second-quarter results, but reported revenue is looking weak.
Only 42 percent of the 120 companies in the S&P 500 index that have reported so far this quarter have beaten analysts? revenue estimates, in contrast to the ?63 percent of S&P 500 companies that beat analysts? quarterly revenue projections over the past decade, according to a report in The Wall Street Journal.
Still, it?s worth remembering that the market is?up sharply from last October?s lows, said BlackRock?s Chief Equity Strategist Bob Doll.
?Given all of the negatives that seem to be paramount in investors? minds, it may be easy to forget that we are still in the midst of a bull market,? Doll said in a research note Monday.
From their lows last October, U.S. stocks climbed an impressive 32 percent to their April 2012 highs, and they have subsequently experienced an 11 percent correction into early June. Since then we have bounced back almost 7 percent, he added, while stocks are up close to 10 percent on a year-to-date basis.
Doll said stock prices should continue to climb, but in a back-and-forth fashion.
?There is still room for additional policy easing around the world given weak growth levels and low levels of inflation,? Doll said. ?Equities do generally benefit during times of policy reflation, but they do so in a volatile fashion given the associated backdrop of economic concerns.?
As many companies prepare to release Q2 earnings, investors are wondering if they will receive any clarity on the markets.
Source: http://marketday.msnbc.msn.com/_news/2012/07/23/12908618-stock-market-facing-a-raft-of-troubles?lite
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