World stocks: Outlook murky despite two interest-rate cuts

NEW YORK - With the corporate-earnings season almost over and two interest-rate cuts under its belt, the stockmarket might appear to be poised for a February rally.

Unfortunately, the outlook remains murky.

Blue chips and technologies fluctuated last week - as they did throughout January - after investors' reactions to poor economic news and earnings.

"There is the fear that before the Fed's policy kicks in and shows up on companies' bottom-lines, which will be at least a six-month lag, we are going to have to go through some awful earnings," said Larry Wachtel, a market analyst at Prudential Securities.

The major market indices closed last week mixed.

The Dow Jones average index of 30 industrials rose 204.12 points - a 1.9 per cent gain - to 10,864.10 for the week, despite a drop of 119.53 points on Friday.

Broader market indices closed the week lower.

The tech-rich Nasdaq composite index lost 120.80 points - or 4.3 per cent - to 2660.50 after a fall of 122.29 points on Friday.

The broader, Standard and Poor's 500 composite index closed the week 5.48 points - or 0.4 per cent - lower, at 1349.47, after Friday's loss of 24.00.

The Russell-2000 index, that tracks the performance of smaller company stocks, picked up 2.82 points - or 0.6 per cent - for the week after it lost 7.44 points on Friday to close at 501.50.

The Wilshire Associates equity index, that represents the combined market value of all New York Stock Exchange, American Stock Exchange and Nasdaq shares, closed the week at $US12.44 trillion - down about $US1.16 trillion from the week before.

In London, the focus is expected to switch to domestic events in the coming week, when the Bank of England mulls its own interest-rate cut and the corporate-results season moves into full gear.

The FTSE-100 index closed last week at 6256.4, down 0.6 per cent, after early rallies petered out when United States growth data showed that the economy shuddered to a virtual standstill at the end of last year.

In the banking sector, Lloyds TSB finally launched a formal bid for Abbey National, to value the home-loan specialist at £19.8 billion. Lloyds slipped 4.1 per cent to 699p and Abbey's fell 1.4 per cent to 1193p.

South African miner Anglo American rose 9.9 per cent to 4500p.

- NZPA