"Selkin said the country's fortunes have shifted as technology has become more important, making the pain from higher oil prices less burdensome to the economy. ''We're so much less energy-dependent than 25 years ago. Even if oil prices go higher, so what? Technology stocks are where the economy is going,'' he said. "
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Sunday September 12, 12:04 pm Eastern Time
WALL ST WEEK AHEAD - CPI may not stir slumbering Dow
By Jennifer Westhoven
NEW YORK, Sept 12 (Reuters) - U.S. stock investors will be looking to a key inflation report for direction this week, but analysts say it would take a major shock to knock the Dow Jones industrial average out of its sideways trading pattern.
The Dow closed on Friday down 50.97 points at 11079.40, but for the week, it edged down not even a half percentage point. In the previous two weeks, it closed with slim losses of 11 points and 10 points, respectively.
On Tuesday, the government will report the Consumer Price Index for August. Economists expect retail prices to rise 0.7 percent compared with an equal rise in July. The ''core'' rate, which strips out the fluctuating prices of automobiles, is forecast to rise 0.4 percent versus a 0.3 percent July gain.
''There could be an impact from the CPI, but I don't expect any huge moves in stocks coming from that number,'' said Rao Chalasani, equities strategist at Chicago's Everen Securities.
''Both bonds and stocks have been going through a consolidation period and my feeling is this sideways trading pattern is going to continue for another month,'' he said.
The CPI is traditionally released a few days after its sister report, the PPI (Producer Price Index). The August PPI rose, but the gains were blamed on higher oil and food prices.
''Even though oil prices are nearly double where they were from $11 a barrel, it just leaves them back at more normal levels,'' said Donald Selkin, chief market strategist at Joseph Gunnar & Co. in New York.
Selkin said the country's fortunes have shifted as technology has become more important, making the pain from higher oil prices less burdensome to the economy. ''We're so much less energy-dependent than 25 years ago. Even if oil prices go higher, so what? Technology stocks are where the economy is going,'' he said.
The leading barometer of U.S. technology stocks, the Nasdaq Composite Index, closed on Friday at a record high of 2897.53.
KICK OFF FOR EARNINGS, PROFIT WARNINGS
''The meter starts running this week'' on third-quarter earnings, according to First Call/Thomson Financial. A trickle of reports are due from firms with accounting calendars that do not match the standard calendar that ends Dec. 31.
On Monday, the Street will hear from sneaker and sportswear company Nike Inc. (NYSE:NKE - news) and drug store chain Rite Aid Inc. (NYSE:RAD - news).
On Tuesday, database software company Oracle Corp. (Nasdaq:ORCL - news) and supermarket chain Kroger Co. (NYSE:KR - news) are on deck and on Thursday report cards are due from cruise company Carnival Corp. (NYSE:CCL - news), cereal maker General Mills Inc. (NYSE:GIS - news) and Federal Express parent FDX Corp. (NYSE:FDX - news).
Meanwhile, earnings warnings could give investors pause. As companies tally up their performances for July and August, those that come up short often tell investors before the earnings period wraps up.
Last week, Coca-Cola Co. (NYSE:KO - news), home appliance maker Maytag Corp. (NYSE:MAY - news), Rubbermaid Inc. (NYSE:RBD - news) and Ingram Micro Inc., the world's top computer wholesaler, warned of disappointing profits. |
