By Nick Godt
As U.S. stocks seemingly continue their steady upward course,
investors will next week turn to more economic data, including key
readings on retail sales and inflation, and try to fine-tune
expectations about the shape of the economic recovery.
"The market continues to look pretty good," said Ken Tower,
market strategist at Quantitative Analysis Services.
In spite of a slump on Friday, stocks rose strongly over the
past week, and remain on firm footing so far in September, which
historically has not been a good month for stocks.
On Friday, the Dow Jones Industrial Average (DJI) fell 22.07
points, or 0.2%, to finish at 9,605.41. The broad S&P 500 Index
(SPX) fell 1.41 points, or 0.1%, to stand at 1,042.73. The Nasdaq
Composite (RIXF) declined 3.12 points, or 0.2%, to 2,080.9.
For the week, the Dow rose 1.7%, the S&P 500 gained 2.6% and
the Nasdaq jumped 3.1%. For September so far, the broad market, as
measured by the S&P 500, is up 2.2%.
"There's a lot of positives as we go into next week after an
upbeat consumer [sentiment] survey and an upbeat outlook from FedEx
[on Friday]," Tower said.
Consumer sentiment, as measured by Reuters and the University of
Michigan, improved markedly in early September after slumping in
the two previous months.
The consumer-sentiment index jumped 70.2 from 65.7 in August.
It's the highest reading since June, and is significantly better
than the 68.0 that was expected by economists surveyed by
MarketWatch.
The market remains powered by expectations that government
measures to boost the economy should see growth return in the
second half of this year and beyond. Yet, rising unemployment and
sluggish consumer spending have remained key areas of concern for
investors.
Still, economic reports after economic reports, and increasingly
some corporate earnings, have continued to come in
better-than-expected.
"We're not at the point where we expect much better things to
come," Tower said.
"But surprises are still likely to be on the upside and on a
day-to-day basis, we're getting more positives than negatives.
That's a radical change after having had the world economy on the
edge of collapse."
On Tuesday, the Commerce Department will release retail sales
figures for August. Economists surveyed by MarketWatch on average
expect retail sales jumped 2.1% last month, following a 0.1% drop
in July.
The boost likely came from the government's popular
"cash-for-clunkers" program to encourage drivers to trade in their
old vehicles for newer, more fuel-efficient ones, according to BMO
Capital Markets.
"However, soft chain-store sales suggest continued weakness in
discretionary spending," the firm said in a note.
Investors will also key in on earnings from electronics retailer
Best Buy Co. Inc. (BBY) on Tuesday.
Also on Tuesday, an index of manufacturing in the New York
region will be released, along with the August producer price
index.
On Wednesday the consumer price index for August, current
account figures for the second quarter, the National Association of
Homebuilders index for September, and industrial production numbers
for August will be released.
On Thursday, August housing starts and September manufacturing
data from the Philadelphia region will be reported.
Fed speak
On Wednesday, the Federal Reserve said the economy is improving
across most U.S. regions but also noted that consumer spending
remains sluggish. The mixed verdict, however, has also reassured
investors that the central bank will keep liquidity flowing,
according to BMO.
On Tuesday, Fed Chairman Ben Bernanke might elaborate after a
speech to be given on the anniversary of the collapse of Lehman
Brothers a year ago.
On Monday, Fed governor Elizabeth Duke, Richmond Fed president
Jeffrey Lacker and San Francisco president Janet Yellen will also
give speeches.
