Recovery, debt woes to hound

NEW YORK – U.S. stocks face added turbulence that could accelerate indexes ambagious through key levels this anniversary as doubts about the all-around recovery's clip abide and fears amble over Europe's absolute debt woes.

Investors anguish that the debt problems will arrest efforts to sustain the beginning bread-and-butter accretion and attenuate aplomb in the adherence of governments that angle abaft the euro.

With the Dow briefly dipping beneath 10,000 aftermost anniversary and the criterion Standard & Poor's 500 (.SPX) bottomward 7.3 percent from its 15-month closing aerial of January 19, money managers and analysts say there is a growing faculty that the U.S. banal market's assemblage from the lows of March 2009 has all but run its course.

"I am in a affected that believes we're in a correction. The affection has angry concise negative," said Eric Kuby, arch advance administrator at NorthStar Advance Management Corp in Chicago. "The accepted trend for added than nine months has been for the bazaar to rally, but now it seems as if the activity has abated, and it's adamantine for the bazaar to move forward."

EUPHORIA VS REALITY

Investors had bet the alpha of 2010 would appearance that the accretion was accepting momentum, but their optimism has been met with added signs of activity bazaar turbulence and anguish over accessible bane from budgetary about-face in Greece, Portugal and Spain.

As a result, the euro has collapsed acutely adjoin the U.S. dollar due to accident aversion, affliction stocks and the prices of all-around commodities. At Friday's close, the criterion S&P 500 apparent its fourth beeline account drop, falling 0.7 percent. For the week, the Dow slid 0.6 percent and the Nasdaq afford 0.3 percent.

Wrapping up an all-embracing affair in Canada's Arctic, European policy-makers aimed to actuate afraid markets that they accept things beneath ascendancy by alms reassurances about debt-strapped Greece and a affiance to accomplish banks accord accomplishment funds.

European Axial Bank President Jean-Claude Trichet said -- in a account issued on Saturday afterwards two canicule of talks by ministers and axial bankers from the Group of Seven's affluent automated countries -- that he believed Greece would accommodated boxy new targets to abate its account deficit.

"We apprehend and we are assured that the Greek government will booty all the decisions that will admittance it to ability that goal," Trichet said.

Wall Street will not be calmly convinced.

"The markets are not demography any prisoners. They're not adorable at things as abandoned incidents. They're adorable at this as the overextension of a contagion," said John Praveen, arch advance architect at Prudential All-embracing Investments Advisers LLC in Newark, New Jersey.

"It's not bright at this point whether this will stop at Europe or whether the alteration has run its course."

Uncertainty surrounding the Obama administration's aldermanic ameliorate agenda for the cyberbanking and healthcare sectors has added the bearishness, forth with anxiety about the United States' own ballooning budgetary deficit.

There are additionally signs that China is adorable to barrier lending to anticipate its abridgement from overheating, which risks derailing the all-around accretion if bang is aloof too soon.

The U.S. government's non-farm payrolls address sowed alike added absorption on Friday as it showed the abridgement accidentally absent 20,000 jobs in January.

BRING ON THE BARGAIN HUNTERS

All told, the alteration was continued anticipated, but there is ambiguity about how far it will go. The abstruse accident from the market's latest collapse briefly collection the Dow beneath 10,000 on Thursday and Friday, but the basis has yet to abutting beneath that level.

Meanwhile, the S&P 500 has burst through key abutment at 1,085, and it fell as low as 1,044.50 on Friday afore airy hardly against the close.

Market technicians accept warned that added downside could booty the S&P 500 as low as 1,036 -- a akin that will announce the "textbook" 10 percent alteration from the January 19 closing peak.

But if the antecedent pullbacks -- in July and in October 2009 -- are any indication, investors could afresh attending for opportunities in the canicule advanced to abrade the bazaar for stocks whose prices accept been pushed bottomward to adorable levels. Late on Friday, there was some affirmation of investors snapping up beaten-down shares as technology and abstracts sectors led a last-minute bounce.

"When aggregate is too bleak, that's back you should attending for the added side," said Ron Florance, administrator of asset allocation and action for Wells Fargo Private Bank in Charlotte, North Carolina. "Corrections are like diets. They're never absolutely pleasant, you affectionate of alarming them, but at the end of the year, you attending bigger and you feel healthy."

The highlight on the bread-and-butter agenda will be the Commerce Department's January retail sales report, due on Thursday, forth with December business inventories and account abandoned claims. The Reuters/University of Michigan analysis of customer affect will accord a basic account for February on Friday. For details, see

Particular absorption will be paid to Federal Reserve Chairman Ben Bernanke's testimony, appointed for Wednesday, afore the House Banking Services Committee. The audition will analyze the unwinding of the Fed's emergency programs.

The abiding beck of balance will continue, with the focus alive to added consumer-oriented companies, including Walt Disney Co (DIS.N), Coca-Cola Co (KO.N), CVS Caremark Corp (CVS.N), PepsiCo (PEP.N), Marriott All-embracing (MAR.N), Hasbro (HAS.N) and Electronic Arts (ERTS.O) amid those set to report.

The consumer's banking bloom is key as investors attending for accuracy on the recovery's prospects. For a abounding balance diary, see

(Reporting by Ellis Mnyandu; Additional advertisement by Leah Schnurr; Editing by Jan Paschal)

(Wall St Anniversary Advanced runs every Sunday. Questions or comments on this cavalcade can be beatific via e-mail to: ellis.mnyandu(at)thomsonreuters.com)