Transcripts

How Much Longer Can The Stock Rebound Really Last?

SUSIE GHARIB: Stock values on Wall Street rebounded sharply this week with the Dow soaring more than 500 points in just the Past three sessions. Investors are wondering if this momentum will continue next Week, another big week for corporate earnings New York bureau chief Scott Gurvey has a preview of what to expect.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Those Wall Street experts who actually came to work on a hot, sticky Friday in New York closed out a week of high volatility with a prediction of more of the same next week. Some detect a definite shift in the tone of the market. Equity strategist Alec Young of Standard & Poor's says we may have hit an inflection point this week. He says investors should be keeping an eye on economic data.

ALEC YOUNG, EQUITY STRATEGIST, STANDARD & POOR'S: So we're going to want to see crude oil, which has pulled back From about $147 to about $128. We're going to want see that continue to fall. Maybe some better than expected economic data. And of course continued better than expected earnings from Corporate America. We think if we see those things we definitely ought to be able to build on the recent rally.

GURVEY: But there is by no means a consensus of opinion. Strategist Michael Ryan of UBS Wealth Management says he is disturbed by the cuts in forward looking guidance accompanying many earnings reports. He says investors must be careful in the stocks they pick and notes that sector leadership is changing.

MICHAEL RYAN, CHIEF INVESTMENT STRATEGIST, UBS WEALTH MANAGEMENT: Health care, consumer discretionary. Those types of sectors are leading and the areas that are laggards right now are sectors like energy and materials that had been the out-performers in the first half of the year.

GURVEY: Many analysts had expected the tech sector to lead a recovery and were disappointed this week when Microsoft (MSFT) and Google (GOOG) both lowered their Guidance. But IBM (IBM) exceed expectations and raised its guidance for the rest of the year. And Intel (INTC) noted strong worldwide demand in posting record second quarter earnings and raising its guidance. Technology analyst Rick Hanna of Morningstar says the difference among the tech companies is in the customers they serve.

RICK HANNA, EQUITY ANALYST, MORNINGSTAR: Microsoft's enterprise spending is still fairly solid. And, you know, Google is more in the consumer space. So I think that you've got that dynamic going on. Enterprise spending versus consumer spending. Those segments that are more consumer sensitive may be first To feel the pains of a slowdown, although those companies that Have international operations Have continued to show very solid growth.

GURVEY: Apple (AAPL) is set to report earnings Monday. That will give investors another view of the tech sector and how the consumer is doing. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.