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Baht/$ 33.51/56
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NEW YORK _ US stocks will start the second half of 2008 staring into the jaws of a bear market. At Friday's closing bell, there appeared to be little relief in sight from runaway oil prices and the lack of reassurances from banks about their already gloomy outlooks. Recession fears are rising with crude's spiral to a succession of record highs and the relentless stream of forecasts for more bank write-downs. When the second quarter ends today, the US market may finish June with its worst monthly percentage decline since September 2002.
''The combination of a banking system that is on its knees and high commodity prices is just making investors nervous,'' said Ray Rund, managing director of Shaker Investments in Cleveland. ''Even though we are not technically in a recession, it certainly feels that way.''
US oil futures shot up to a record high just a penny shy of $143 a barrel on Friday _ wrapping up a week when the president of Opec predicted that prices could rise as high as $170 in the coming months. Gold hit a one-month high.
The Dow Jones Industrial Average sank 4.2% on the week to close on Friday at 11,346.51, approaching the definition of a bear market _ a loss of 20% from last year's high. The S&P 500 slumped 3% to 1,278.38 and the Nasdaq fell 3.8% to 2,315.63. It was the worst week for the Dow and the Nasdaq since Feb 10.
The outlook for the US job market is grim, based on forecasts for Thursday's payrolls report. Economists polled by Reuters expect a loss of 60,000 jobs in June, compared with a decline of 49,000 in May. The unemployment rate, however, is predicted at 5.4%, a slight improvement from May's 5.5%, which was the highest since October 2004.
Thursday's data will include the Institute for Supply Management's June reading on the services sector, a day before the market closes for the Independence Day holiday. The ISM index is pegged at 51.0 in June, compared with 51.7 in May, the Reuters poll showed.
The ISM manufacturing index, due tomorrow, is forecast at 48.6 in June, down from May's 49.6, with a reading under 50.0 signalling contraction, the Reuters poll showed.
Also due for release this week are figures on car sales. Gasoline prices at $4 a gallon are slashing the demand for gas-guzzling sport utility vehicles. Shares of General Motors last week fell to a 53-year low after Goldman Sachs cut its rating on GM to ''sell'' and warned the carmaker would have to raise capital.
Domestic car sales are estimated to have declined in June to an annualised pace of 5.29 million units from May's rate of 5.36 million, while truck sales are predicted to have slowed to an annualised rate of 4.92 million in June from May's 5.12 million, a Reuters poll showed.
Elsewhere, the market is eager to see that the impact of the credit crisis on banks is abating before there can be any meaningful rebound in stocks.
Adding to investors' queasiness is the Fed's decision last week to take a break from cutting interest rates as the threat of inflation becomes more ominous.
To analysts, the Fed's growing discomfort with inflation suggests that it may choose to put its worries about growth on the back burner and focus instead on price stability.
The Fed on Wednesday left its benchmark rate at 2%, breaking a cycle of cutting its target rate for overnight bank loans by 3.25 percentage points since mid-September 2007.
''My personal opinion is that we could test 11,100 on the Dow in the next couple of days,'' said Victor Pugliese of Broadpoint Securities in San Francisco. ''I think the market still trends down and if we can hold at the 11,000 or 11,100 mark, there's a chance we can get a bear market rally for a few days.''
Notable earnings reports this week will come from the tax preparer H&R Block Inc, the education company Apollo Group Inc and the discount chain Family Dollar Stores Inc. REUTERS
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