Friday January 15, 7:25 pm Eastern Time
Greenspan, Brazil shakeout seen as focus next week
(Will be led)
By Ian Simpson
NEW YORK, Jan 15 (Reuters) - U.S. stock markets could turn higher next week, with the focus on U.S. Federal Reserve Chairman Alan Greenspan's testimony before Congress and the aftermath of Brazil's currency devaluation.
Analysts said stocks could head up in a holiday-shortened week as markets regained their footing after Brazil's de facto devaluation of its currency.
New York markets will be closed on Monday for the Martin Luther King Jr. holiday.
Wall Street also will be paying attention to a wave of earnings reports and Tuesday's State of the Union address from President Bill Clinton, now facing a Senate impeachment trial.
The speech could give clues about economic policy and Washington's views about the United States and international financial scene.
Markets likely will mark time until Greenspan speaks. The central bank chief is scheduled to testify before the House of Representatives' Ways and Means Committee at 10 a.m. EST (1500 GMT) Wednesday.
Carol Stone, deputy chief economist at Nomura Securities International, said markets would listen to Greenspan for signs of whether economic risk had remained steady or worsened.
''Markets are going to look at what his attitude is ... the balance of risks in the U.S. economy, and his general outlook,'' she said.
Joseph Barthels, chief investment strategist at Fahnestock & Co. in Great Neck, N.Y., said the drop in stock prices this week, worsened by concerns about Brazil, meant selling was overdone.
Even with a 200-point surge in the Dow Jones industrial average on Friday, the blue-chip index was still off 4 percent from its record close of 9,643.32 points Jan. 8.
The Dow dropped 228 points on Thursday, unnerved by Brazil's decision the day before to devalue its currency, the real, by almost 9 percent.
The blue-chip index roared back Friday, however, after Brazil gave up trying to support the real and let it float freely in foreign exchange markets.
The Dow's drop Thursday had ''probably exhausted the sellers in the near term,'' Barthels said. ''The market will have a mild upside bias.''
Thom Brown, managing director of Rutherford Brown and Catherwood, said the week's downturn had injected a note of sobriety into the ''crazy speculative activity'' that had marked such high-flying sectors as Internet stocks.
''We'll be in a bit more stable mood for trading next week, and that will be a good thing,'' he said.
Economic data is expected to have little impact on markets next week, with December housing starts reported at 8:30 a.m. EST (1330 GMT) on Wednesday.
Analysts polled by Reuters forecast housing starts for the month to be at an annualized rate of 1.66 million, up from 1.649 million the month before.
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