It was another brutal week for Wall Street but with a glimmer of hope that sparked fresh talk about whether the stock market had finally hit a "bottom" that will allow a new rally phase to start.
Despite the heavy losses, some analysts expressed optimism that the market was able to hold above key lows for the indexes in October, and said this could be a sign that selling pressures have been exhausted.
Analysts pointed to market action Thursday, where the Dow Jones Industrial Average reversed losses of some 300 points to stage a powerful rally of more than 550 points.
The market action "may go down as the final low of the market mess that began a year ago," said Bob Dickey, a technical analyst at RBC Wealth Management. "It was the fourth test of the low zone in five weeks, and by most technical measures was also the most meaningful.
There was no apparent reason for the market to rally, which actually helps in the analysis, because it means that the markets have most likely seen an exhaustion of the selling pressure."
Still, in the week to Friday, Dow index slid 4.99 percent to 8,497.31. The tech-heavy Nasdaq plunged 7.92 percent to 1,516.85 and the broad-market Standard & Poor's 500 dropped 6.17 percent to end at 873.29.
Some said it was too soon to say the bottom had been reached. "So many analysts are saying that (Thursday) represented a successful test of the intra-day lows and probably marked capitulation," said Fred Dickson at DA Davidson & Co.
"We will withhold judgement on that question until we make sure that having recorded some gains, traders decide to take profit, starting the familiar cycle over again."
Linda Deussel at Federated Investors said the market is likely to remain under pressure for some time but does not see further heavy declines. "This may not be the time to jump into stocks with both feet," she said. "But we strongly believe that a bottoming process is under way. We remind investors that the lion's share of the first-year gains in a new bull come in the first few months."
The bond market remained firm. The yield on the 10-year Treasury bond fell to 3.750 percent from 3.780 percent a week earlier, and than on the 30-year Treasury bond eased to 4.230 percent from 4.261 percent. The lower yields reflect higher bond prices. In the coming week, the market is likely to consider any actions by the weekend summit of the Group of 20, an emergency meeting of leaders on the global financial crisis.
Also on tap are reports on US industrial production, housing starts and inflation. Some analysts say the grimmer-than-expected data point to conditions that are even worse than markets have anticipated. "It turns out I have not been pessimistic enough," said Scott Anderson, economist at Wells Fargo.
"The current quarter is going to be terrible, and there isn't much Washington is going to be able to do about it. GDP growth in the fourth quarter is now on track to plunge 4.2 percent on an annualised basis with no major sector left to hold up this 'wet noodle' of an economy."
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