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Investors still glowing from the Dow Jones industrial
average's reach toward new highs last week will be looking for signs in
the coming week of whether the market's run-up will continue.
With the quarter's end so recent, investors won't be able to rely on
much in the way of corporate earnings news, but rather will be looking
for any companies that might issue profit forecasts and to economic
news.
Perhaps the most critical report of the week will be Friday's
employment report from the Labor Department. Investors will be
anxiously awaiting the government's jobs creation figure.
September's robust stock performance was based in part on investors'
notion that while the economy is slowing, it is not necessarily headed
for a recession. The Federal Reserve's decision to leave short-term
interest rates unchanged for a second straight time last month signaled
to some that the central bank had perhaps ended a two year run of 17
straight increases. The prospect of cheaper access to capital is not
only welcome for business but also perhaps for would-be home buyers.
There has been widespread concern that the economy would stumble if the
housing market were to cool too quickly.
Although the markets ended lower Friday after four days of gains, the
stock market showed its strongest third-quarter performance in nine
years. During trading Thursday, the Dow briefly topped its closing
record from of 11,722.98 set in January 2000. Although the end of the
quarter often brings window-dressing as institutional investors try to
polish their numbers for the period, many market observers remain
upbeat about the market's longer-term prospects.
"In the short-term it's maybe a little ahead of itself," Mark
Minervini, president of Minervini Private Access, said of the markets
and the Dow's upward march. However, he remains bullish on the markets
over all and sees the Dow's attention-grabbing gains as good for
investor sentiment.
"There are a lot of stocks that have strong fundamentals that have not
really advanced much in this rally. We think those stocks left behind
with good fundamentals are going to play catch-up."
Last week, the Dow rose 1.49 percent, the Standard & Poor's 500
index, which remains near a 5 1/2-year high, gained 1.60 percent and
the Nasdaq advanced 1.78 percent.
ECONOMIC
DATA
On Monday, the Commerce Department is scheduled to provide the latest
insight into the housing sector with a report on construction spending.
On Tuesday, Wall Street will get a snapshot of the auto industry, as
domestic and foreign manufacturers release their September sales
figures. As with a cooling housing market, the automotive sector has
kept Wall Street guessing about what fallout there could be from
Detroit's struggles to stanch its enormous losses in part by slashing
jobs.
Wednesday brings two speeches from Fed officials and another Commerce
Department report, this time on factory orders. Fed Chairman Ben
Bernanke is slated to speak on savings before the Economics Club of
Washington. His speech could be overshadowed, however, by that of Vice
Chairman Donald Kohn, who is to speak at New York University that
evening on the outlook for the economy.
The Commerce Department's data will reflect nondurable goods orders.
Last week, the agency disappointed investors with a report that orders
to U.S. factories for large manufactured -- or durable -- goods fell
for a second straight month in August, the first time in more than two
years there has been a consecutive decline.
On Friday, the Labor Department issues its employment data, including
the number of jobs created, average hourly earnings and the
unemployment rate. The jobs creation figure is of particular concern,
as it indicates how much the economy is growing or contracting.
EARNINGS
With a light earnings schedule, investors will have to wait until
Thursday for results from sizable companies. Due that day is a report
from Constellation Brands Inc. Investors expect the wine and spirits
maker's second-quarter profit will total 43 cents a share. The company,
which has traded between $21.15 and $28.97 during the past 52 weeks,
closed at $28.78 Friday.
Hotel chain Marriott International also weighs in, with its fiscal
third-quarter results. Analysts are looking for a profit of 30 cents a
share. The stock, which closed Friday at $38.64, has traded between
$29.01 and $39.74 in the past 52 weeks.
Expected to round out Thursday, and the week's earnings, is a fiscal
fourth-quarter report from Vail Resorts Inc., whose properties include
the Vail, Keystone and Breckenridge ski areas. Wall Street expects the
company, which will soon head into its peak time of year, will post a
loss of 80 cents a share for its fourth quarter. The stock, which has
traded between $27.71 and $41.55 for the past 52 weeks, closed Friday
at $40.02.
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