Wall St Week Ahead-All hands back on deck, stocks seen rising
( one possibility-->"might"...nothing goes straight down)
It's all in "da pereception"...
By Brendan Intindola
NEW YORK, Sept 2 (Reuters) - U.S. stocks are expected to
rise this week as Wall Street begins September by dusting off
vacation-idled desks to find stocks near five-month lows and a
few bits of encouraging economic data from late last week.
"It seems to me that the market is reading every bit of
information in the darkest possible shading. The pessimism is
setting the stage for the market to respond well when there is
news that is not as bad as the market fears," said Milton
Ezrati, senior economist and strategist at Lord Abbett & Co.,
an investment management company which oversees about $40
billion.
"We expect the market to start recovering next week. A
weekly call is always problematic, but there will be more
volume and the bias should be up."
Trading this week will be cut to four days since the
markets are closed Monday, Sept. 3 in observance of America's
Labor Day holiday.
Economic data, all covering August, set for release include
the monthly employment report on Friday, Tuesday's National
Association of Purchasing Management's index, and motor vehicle
sales announced on Tuesday.
Bob Robbins, chief investment strategist at SunTrust
Robinson Humphrey in Atlanta, said, "The NAPM numbers are going
to be pointing to a recovery in the economy and this is
important because this is the first time that real economic
activity is being shown to turn up out of six, seven or eight
bad months.
"I am forecasting a significantly better than expected
number ... and watch the new orders number, I think it will be
significantly better than expected," Robbins said of the NAPM
figures due Tuesday.
MANUFACTURING: PICKING UP A PULSE?
Last Friday, stocks ended a three-day rout that scalped
leading indexes to lows unseen since early April, and pushed
the Dow Jones industrial average<.DJI> below 10,000.
Friday's gain was built on new data showing signs of life
in the manufacturing sector: the U.S. government reported new
orders for goods ticked up 0.1 percent in July, well above an
expected drop of 0.5 percent.
Also, the Chicagoland Business Barometer rose in August to
a seasonally adjusted 43.5 from 38.0 in July, the National
Association of Purchasing Management-Chicago said.
At the same time, the University of Michigan's closely
watched consumer sentiment index showed only a modest dip to
91.5 from 92.4 in June.
With this positive data, the focus is now sharpened for
Tuesday's NAPM reading for August. The market is now expecting
a reading of 43.9 versus the prior month's 43.6. A number below
50 indicates business activity is contracting.
MORE WALL STREETERS, LIGHTER MOOD?
Ned Reilly, chief investment strategist, State Street
Global Advisors, Boston, agrees recent sharp losses and an end
to the summer doldrums could lead to a positive week.
"I'm hoping that we would start a rally after the Labor Day
period because all of the players will be back. I think that
they should be in the frame of mind that stocks are pretty
cheap at the moment."
A diverse collection of stocks skidded to 52-week lows
last week, including Compaq Computer Corp.<CPQ.N>, Walt Disney
Co.<DIS.N>, Ford Motor Co.<F.N>, Sun Microsystems<SUNW.O> ,
Starbucks Corp.<SBUX.O> and Bank of New York Co. Inc.<BK.N>
For the week, the Dow fell 4.5 percent, the Nasdaq tumbled
5.8 percent, and the S&P 500 declined 4.3 percent.
Year-to-date, the Dow is off 7.8 percent, to Nasdaq is 26.9
percent lower and the S&P 500 has dropped 14.1 percent.
EARNINGS WARNINGS
Investors will likely have to digest more quarterly
earnings warnings, the kind of news that depressed last week's
market. Specifically, fresh pessimism from Sun Micro and
fiber-optic leader Corning Inc. <GLW.N> sent buyers running for
the exits.
"The level of expectation out there has been diminished to
zero," Reilly said. "I can't say the psychology could be any
worse. People are going to start looking at the glass
one-quarter full."
Reilly said that given the current negative market
psychology, earnings warnings will offer relief simply because
the companies are clearing the decks by going public with the
news. For many companies, investors have already marked down
the prices of stocks due to downbeat earnings expectations.
"I am hopeful that the pre-announcements will be
forthcoming and at least end the guessing and anxiety that was
reflected in stock prices in the last couple of weeks," Reilly
said
"It is pretty well known that the third quarter (earnings)
is not going to show much improvement relative to the second,
it will probably mark the absolute low, and the fourth quarter
will show much more improved earnings," he said.
Companies, Reilly said, have had a long enough period of
time to reduce their variable costs, and manage once-bloated
inventories downward, "which was has been a very hard period
for most of these companies."
DATA POINTS: CARS, JOBS, NAPM,
In addition to Tuesday's NAPM report, on Friday morning,
the market will get a look last month's labor market. The
average forecast is for a 33,000 drop in non-farm payrolls,
versus the previous drop of 42,000, and 4.6 percent
unemployment, compared to 4.5 percent in July.
Also, Tuesday will bring information about August car and
truck sales.
((--Brendan Intindola, Wall Street Desk, 646-223-6111)).
REUTERS
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