UPDATE 1-Wall St Wk Ahead: For stocks, angst over Europe, jobs

(Updates with Geithner letter and Group of 20 statement over
weekend)

By Caroline Valetkevitch

NEW YORK, June 6 (BestGrowthStock) – U.S. stocks (Read more about the stock market today. ) could face more
pressure this week unless investors get some relief from
worries about Europe, jobs and the toll they might take on the
economic recovery.

Reports on retail sales and consumer sentiment, both of
which should offer clues on the outlook for spending, are among
the week’s major economic indicators. Also on tap will be
international trade data.

The impact of BP’s (BP.N: ) (BP.L: ) massive Gulf Coast oil
spill on the environment and the energy industry also is likely
to stay in focus, with moves to contain the spill so far having
failed.

The three major U.S. stock indexes sank on Friday, with the
Standard & Poor’s 500 index (.SPX: ) suffering its worst
percentage drop since May 20, after a disappointing U.S. jobs
report and new concerns that the European debt crisis was
spreading.

“We’re going to take our clues from what’s happening in
Europe as it seems to be the emotional drain on the market,”
said Robert Froehlich, senior managing director of The Hartford
Mutual Funds in Simsbury, Connecticut.

In a June 3 letter released on Saturday as the second day
of a Group of 20 meeting of finance ministers and central
bankers got under way, U.S Treasury Secretary Timothy Geithner
told policy-makers of the world’s leading developed and
emerging economies they can’t rely on the debt-burdened U.S.
consumer to increase demand for global exports and help boost
the world’s economy.

“The necessary shift toward higher savings in the United
States needs to be complemented by stronger domestic demand
growth in Japan and the European surplus countries, and
sustained growth in private demand, together with a more
flexible exchange rate policy, in China,” Geithner wrote.

The G20, in a communique released after two days of talks
in South Korea ended on Saturday, did not specifically cite the
euro zone’s debt troubles.

“Those countries with serious fiscal challenges need to
accelerate the pace of consolidation,” the G20 communique said.
“We welcome the recent announcements by some countries to
reduce their deficits in 2010 and strengthen their fiscal
frameworks and institutions.”

S&P 500 OFF OVER 10 PCT FROM PEAK

Following Friday’s sharp sell-off, the S&P 500 is down 12.5
percent from its most recent closing high on April 23. That
puts the broad market benchmark firmly in correction territory,
which Wall Street defines as a drop of 10 percent or more from
a recent peak.

On Friday, the Dow Jones industrial average (.DJI: ) fell
more than 300 points to close below the psychologically
important 10,000 mark, while the S&P 500 ended at its lowest
level since February, falling below the technical support
levels of 1,070 and 1,065, and finishing below the intraday low
reached during the May 6 “flash crash” sell-off.

This means “the downtrend from late April is reasserted,”
said Chris Burba, a short-term market technician at Standard &
Poor’s in New York.

For the past week, the Dow industrials fell 2 percent,
while the S&P 500 slid 2.3 percent and the Nasdaq (.IXIC: ) lost
1.7 percent.

VIX RISING

The CBOE Volatility Index (.VIX: ) surged as the U.S. stock
indexes tumbled on Friday. The VIX, which is Wall Street’s
favorite measure of investor fear, jumped 20.4 percent to close
at 35.48.

Among factors worrying investors on Friday, the U.S.
government’s report showed weaker-than-expected job growth for
May, with a large portion of those being temporary hirings for
the U.S. Census.

Overseas, a Hungarian official said the country was at risk
of a Greek-style crisis.

“It is just another in a line of worries coming out of
Europe regarding budget deficits and the ability to control
spending,” said Michael Sheldon, chief market strategist at RDM
Financial in Westport, Connecticut.

The energy sector had started the holiday-shortened week
with a sharp drop after yet another failed attempt to halt the
oil spill in the Gulf.

By Friday’s closing bell, energy shares had lost more
ground as BP said it had begun capturing oil spewing from the
ruptured Gulf of Mexico well. But tar balls washed ashore in
Florida and the pressure mounted on BP to free up cash to take
care of the damage.

In another blow, U.S. crude oil futures (CLc1: ) fell 4.2
percent, or $3.10, to settle on Friday at $71.51 a barrel as
the U.S. payrolls data and Europe’s bank woes stirred worries
about economic recovery and energy demand.

An S&P index of energy shares (.GSPE: ) slid 3.5 percent on
Friday, while Exxon Mobil Corp (XOM.N: ) lost 3.2 percent to end
at $59.62. New York-traded shares of BP sank 5.3 percent to
$37.16.

LISTENING FOR KA-CHING!

This week, retail sales could be key, Froehlich said.

“If we get a strong number, we could reverse everything
that was negative with this employment report today.”

The Commerce Department’s May report on U.S. retail sales,
due Friday, is forecast to show an anemic gain of 0.2 percent
versus an April increase of 0.4 percent, according to a Reuters
poll. Ex-autos, the forecast is for a May gain of just 0.1
percent compared with April’s 0.4 percent rise.

However, the Thomson Reuters/University of Michigan’s
Surveys of Consumers, also due on Friday, is forecast to show a
preliminary June reading of consumer sentiment at 74.5 — up
from the final May sentiment reading of 73.6.

This week, a report on the international trade deficit for
April, due on Thursday, is forecast to show a trade gap of $41
billion versus a March deficit of $40.42 billion. The March
figure was a 15-month high.

The trade data could affect the dollar, which has been
rising against the euro. Last week, the euro fell (Read more about the trembling euro. ) against the
dollar on Friday to below $1.20 for the first time in more than
four years.

That hurts the outlook for U.S. companies that rely heavily
on overseas sales.

Initial jobless claims for the week that ended June 5, also
due on Thursday, are forecast to slip. But continuing claims
are seen nearly flat, at 4.64 million versus about 4.67 million
for the previous week.

Stock Investing

(Wall St Week Ahead runs every Sunday. Questions or comments
on this column can be e-mailed to:
caroline.valetkevitch(at)thomsonreuters.com)
(Reporting by Caroline Valetkevitch; Additional reporting by
Leah Schnurr; Editing by Jan Paschal)

UPDATE 1-Wall St Wk Ahead: For stocks, angst over Europe, jobs