NEW YORK: U.S. stock investors could scramble to pick up some of the market's best recent performers in the week ahead, starting March 28 as the quarter comes to an end, putting the spotlight on energy and industrial companies.
But worries about Japan, the Middle East and oil prices will persist and keep uncertainty high, analysts said, even as the VIX, the CBOE Volatility Index .VIX, slid 27 percent this past week.
Another driver could come from economic data, with the U.S. government's monthly payrolls data -- the most widely watched economic report of the month -- due on Friday.
Economic data lately has taken a backseat to geopolitical events, with Japan's massive earthquake and tsunami sparking fears of a nuclear disaster in the country and driving the most recent pullback in stocks.
But many expect window dressing, where fund managers sell stocks with big losses and buy ones with big gains to spruce up their portfolio's quarterly performance, to dominate trading.
"I think a number of people viewed the harshness of the sell-off as an opportunity to pick up some inappropriately punished stocks," said Michael Strauss, chief economist of Wilton, Connecticut-based Commonfund.
The strategy contributed to a bounceback late this week, with the Dow Jones industrial average .DJI and Nasdaq .IXIC posting their best weeks since July. The benchmark Standard & Poor's 500 .SPX had its best week since early February.
Analysts say the stock market's recent performance has been strongly influenced by expectations for the upcoming earnings reporting period, which kicks off the second week of April.
Oracle's upbeat outlook late Thursday and its stock's 1.6 percent rise on Friday is one example of that, while the energy sector has benefited from the view that the run-up in oil prices will mean stronger-than-anticipated results for producers and refiners.
KING OIL
Energy, up about 14 percent since the start of the quarter as measured by the S&P energy index .GSPE, is by far the sector with the biggest gains for the quarter to date.
Brent crude oil prices are trading at $115 a barrel, just off recent 2 1/2-year highs, as western powers last weekend launched a military campaign in oil producer Libya and unrest escalated in other countries, including Yemen and Bahrain.
While higher oil prices are seen as an overall drag on the global economy, they boost the earnings and shares of energy companies.
"If they're able to sell oil at anywhere near the spot prices, they should post a really good quarter, and we're already seeing that in the stock prices," said Fred Dickson, chief market strategist of D.A. Davidson & Co. in Lake Oswego, Oregon.
Marathon Oil (MRO.N), up about 40 percent for the quarter to date, has the fourth-best gain in the S&P 500 for the last three months, and energy companies dominate the quarter's top performers. El Paso Corp (EP.N) is up 31 percent and Valero Energy (VLO.N) is up 30 percent. - Reuters
But worries about Japan, the Middle East and oil prices will persist and keep uncertainty high, analysts said, even as the VIX, the CBOE Volatility Index .VIX, slid 27 percent this past week.
Another driver could come from economic data, with the U.S. government's monthly payrolls data -- the most widely watched economic report of the month -- due on Friday.
Economic data lately has taken a backseat to geopolitical events, with Japan's massive earthquake and tsunami sparking fears of a nuclear disaster in the country and driving the most recent pullback in stocks.
But many expect window dressing, where fund managers sell stocks with big losses and buy ones with big gains to spruce up their portfolio's quarterly performance, to dominate trading.
"I think a number of people viewed the harshness of the sell-off as an opportunity to pick up some inappropriately punished stocks," said Michael Strauss, chief economist of Wilton, Connecticut-based Commonfund.
The strategy contributed to a bounceback late this week, with the Dow Jones industrial average .DJI and Nasdaq .IXIC posting their best weeks since July. The benchmark Standard & Poor's 500 .SPX had its best week since early February.
Analysts say the stock market's recent performance has been strongly influenced by expectations for the upcoming earnings reporting period, which kicks off the second week of April.
Oracle's upbeat outlook late Thursday and its stock's 1.6 percent rise on Friday is one example of that, while the energy sector has benefited from the view that the run-up in oil prices will mean stronger-than-anticipated results for producers and refiners.
KING OIL
Energy, up about 14 percent since the start of the quarter as measured by the S&P energy index .GSPE, is by far the sector with the biggest gains for the quarter to date.
Brent crude oil prices are trading at $115 a barrel, just off recent 2 1/2-year highs, as western powers last weekend launched a military campaign in oil producer Libya and unrest escalated in other countries, including Yemen and Bahrain.
While higher oil prices are seen as an overall drag on the global economy, they boost the earnings and shares of energy companies.
"If they're able to sell oil at anywhere near the spot prices, they should post a really good quarter, and we're already seeing that in the stock prices," said Fred Dickson, chief market strategist of D.A. Davidson & Co. in Lake Oswego, Oregon.
Marathon Oil (MRO.N), up about 40 percent for the quarter to date, has the fourth-best gain in the S&P 500 for the last three months, and energy companies dominate the quarter's top performers. El Paso Corp (EP.N) is up 31 percent and Valero Energy (VLO.N) is up 30 percent. - Reuters
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