Stocks May Seesaw Ahead of Holiday Season
URL:http://www.foxnews.com/story/0,2933,103142,00.html
Saturday, November 15, 2003
NEW YORK — U.S. stocks are set to bounce around their current levels next week, a little below year-highs, as investors wait for a signal that the economic recovery has reached a new level.
The focus will also turn to retail companies for guidance on the vital holiday season.
Blue-chip stocks dipped this week despite some encouraging jobs data, as leading retailer Wal-Mart Stores Inc. (WMT) offered a lukewarm holiday profit forecast and investors dumped some technology stocks after the recent run-up.
"Near-term I expect to see more consolidation as the Dow approaches 10,000," said Fred Dickson, chief market strategist at fund firm D.A. Davidson & Co. "But we view this period as a healthy pause for the market."
The Dow Jones industrial average dropped 69.26 points, or 0.7 percent, to 9,768.68 on Friday, while the broader Standard & Poor's 500 Index fell 8.06 points, or 0.76 percent, to 1,050.35. The technology-laced Nasdaq Composite Index dropped 37.09 points, or 1.89 percent, to 1,930.26.
Stocks were down this week despite the upbeat economic numbers as investors decided stocks' current values have exceeded their immediate prospects.
"Over the past week, the economy began to catch up with the stock market," said Gordon Fowler, chief investment officer at money manager the Glenmede Trust Co., in his latest market outlook.
Corporate earnings and capital spending are up, consumers are spending and companies are hiring again. "So how did the stock market react?," asked Fowler. "It yawned and looked back at the economy and asked: 'What took you so long?"'
For the week, the Dow fell 0.4 percent, the S&P 500 sagged roughly 0.3 percent and the Nasdaq dropped 2.1 percent.
Since hitting 2003 lows in March, the market has surged, leaving some investors concerned that much of the U.S. economic rebound is already factored into current stock prices.
Investors are now looking for the next piece of data that will drive the market higher. But the coming week is not likely to offer the conclusive proof of a booming economy that many demand.
Key data for the coming week includes the consumer price index (search) scheduled for Tuesday at 8:30 a.m. , which will give the latest read on inflation. Economists polled by Reuters expect a 0.1 percent rise in consumer prices for October, down from 0.3 percent the month before. A figure significantly above that would stimulate debate on when the Federal Reserve would start to ratchet up rates to cool off an overheating economy.
"We should not be surprised by an increase in inflation at this stage of the recovery," said Fowler. "While the Fed is unlikely to raise short-term rates until a recovery looks sustainable, long-term rates can and will rise in anticipation of higher inflation levels down the road."
On Wednesday, housing starts (search) data is due at 8:30 a.m., which will give an insight into the confidence of home builders that people will buy new homes and shed some light on the knock-on demand for household goods.
Third-quarter earnings trail off next week, with only a handful of major companies presenting their latest scorecard, including retailers Toys R Us Corp. (TOY) on Monday and Home Depot Inc. (HD) on Tuesday.
After leading store chains Wal-Mart and Target Corp. (TGT) offered lukewarm profit forecasts for the vital holiday season on Thursday — taking the the stock market down a peg or two — investors will be hoping for more robust outlooks on the mood of the American shopper, who has almost single-handedly driven the economy's recovery so far.
Among other bellwether stocks, computer and printer giant Hewlett-Packard Co. (HPQ) reports on Wednesday and entertainment conglomerate Walt Disney Co. (DIS) reports on Thursday. |
