Europe, Facebook Set to Dominate Coming Week
"I certainly expect to see Europe in the headlines again next week and not in a good way," said Adrian Day, president of Adrian Day Asset Management.
Transformational elections in Greece and France reignited worries about the stability of the eurozone, sending U.S. stocks lower this past week. Spain was also in focus after the country was forced to bail out Bankia, its fourth largest bank by assets.
Overall, the Dow Jones Industrial Average fell 1.7% on the week to close at 12,820.60, the S&P 500 dropped 1.1% to finish at 1353.39, and the Nasdaq Composite gave back 0.8% to settle at 2956.34. Year to date, the indices are up 4.9%, 7.6% and 12.6%, respectively.
Greece is still working to solidify a new government, and in the coming week, French President-elect Francois Hollande and Germany Chancellor Angela Merkel are slated to meet on Tuesday, according to U.K. newspaper The Telegraph .
"They can hug and hold hands, but that only takes us back to where we were a month ago," Day said, adding that because of the abundance of issues in Europe, there are many future steps to be taken. "If Germany and France aren't able to work together, what are we left with? It is a problem for Europe."
Day said he thinks Hollande and Merkel's body language during their meeting will be telling and something for investors to watch.
Doug Cote, chief market strategist at ING Investment Management, isn't expecting much actual news from across the pond.
"For the foreseeable future, we will continue to have noise from Europe, and that's all that is, noise," said Cote.
Meanwhile, Facebook is looking to raise about $10.6 billion in its much-anticipated public debut in the coming week. The social networking giant has set a price range of $28-$35 for the shares , which are expected to price after the market closes Thursday.
There have been mixed reports so far about how heavy the interest in the stock is at those levels following the start of the company's roadshow this past week.
Day expects that if Facebook's IPO does relatively well, it will have a "positive, but modest positive" effect on the markets. But, if Facebook's IPO turns sour quickly, that could have a bigger influence on trading, Day said, adding that he does not anticipate a Facebook flop.