Wall Street braces for turbulent season

Published: 2009/09/07

WASHINGTON: As caution creeps back into Wall Street, investors have pulled back to consolidate recent hefty gains amid questions about whether stocks have hit their peak for 2009.

Losses in the past week came after a historic rally of some 50 per cent for the broad market, but also amid jitters about the "September effect" reflecting a historical trend of a weak period and last year's market calamity in September.

Going into the US Labor Day holiday weekend, the blue-chip Dow Jones Industrial Average fell 1.18 per cent for the week to end at 9.441.27.

The technology-heavy Nasdaq composite dipped 0.49 per cent to 2,018.78 and the broad-market Standard & Poor's 500 index pulled back 1.22 per cent to 1,016.40.

With the broad market still up around 50 per cent from lows in early March, some analysts argue that stocks have risen too far too fast over the past six months.

David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates, said the market appears to be entering a new phase, having shifted its view from a contracting economy to one that is growing again. "For months, the equity market had this uncanny ability to rally on any good news, as the psychology took hold that less-negative data was a positive," Rosenberg said. - AFP