Wall Street’s march toward Dow 10000 next week will have to go through a minefield of possible bad news, including several gauges on the still-weak housing market and new data that give clues about the health of cash-strapped consumers.
Despite fears September would live up to its bearish track record, the markets have had almost no trouble at all building on their summer surge this month, with stocks closing at fresh 2009 highs on Friday.
In fact, the Dow Jones Industrial Average has closed higher in eight of its last 10 sessions, losing just 30 points total in its two losing days. That begs the question: Is the next stop 10000?
“There’s so much positive momentum in the market at this moment that I think 10000 is clearly very doable in the very short term,” NSYE trader Ted Weisberg of Seaport Securities told FOX Business.
While he’s not sold on the fundamentals behind it, Frank Davis, director of sales and trading at LEK Securities, agrees.
“It’s almost like there’s a psychological magnet to 10000,” said Davis. “Then perhaps we’ll have the real wrestling match. I’m not convinced this is here to stay.”
The bulls will have to contend with a litany of potentially ominous economic reports next week about two of the economy’s biggest problem children: housing and consumers.
"We’re certainly due for a pullback. If there is any disappointment out there in the economy, which we have yet to see, we’re probably due for a selloff," said Weisberg.
At the same time, the Federal Open Market Committee, the Federal Reserve’s policymaking arm, is set to conclude a two-day meeting Wednesday afternoon. Economists see virtually no chance Ben Bernanke’s Fed will decide to hike rates but it could offer more upbeat commentary on the economy and signal its intent to unwind certain credit facilities.
Last week Bernanke made headlines by saying the recession “is very likely over at this point.” However, the Fed chief added a caveat, saying, “it’s still going to feel like a very weak economy for some time.”
Just how weak of an economy could be decided by how quickly consumer spending and the housing market recover.
The government is set to release new data on housing prices for July on Tuesday. And the National Association of Realtors is scheduled to release a pair of reports on August existing home sales and new home sales on Thursday and Friday.
Also, home builders Lennar (LEN) and KB Home (KBH) could give new insight into the housing markets, as they are set to report quarterly results on Monday and Friday respectively.
Much of the focus during the second half of next week will likely be on the state of consumer spending, which remains under pressure due to high unemployment and depressed real estate valuations.
The government is set to give a peek at the labor market by reporting initial and continuing jobless claims on Thursday. And a revision to the University of Michigan/Reuters consumer sentiment index for September is set to be released on Friday.
A report on durable-goods orders, a broader measure of the strength of the economy, is also slated for release on Friday.
On the earnings front, food makers General Mills (GIS) and ConAgra (CAG) are scheduled to release their quarterly reports on Tuesday and Wednesday.
Also, the tech sector is likely to be moved by BlackBerry maker Research in Motion (RIMM), which is expect to release earnings and update its phone shipments on Thursday.
Given the multitude of economic reports and the FOMC statement, some traders are hoping volume picks up after a week that appeared to lack major catalysts.
“This week felt like a hangover from the summer. There’s definitely a lull. There’s a general feeling that a catalyst is wanted or needed -- whether that’s going to move them up or down,” said Davis
Week Ahead: Tech and Retail Earnings On TapShoppers, homes show signs of life
