December 12, 2006 > Wall Street again looks to data for sign of how year will end
Wall Street again looks to data for sign of how year will end
by Tim Paradis
NEW YORK (AP) _ Wall Street will wade through a slew of fresh economic data in the coming week as it strives to determine how well the economy is holding up and whether the surge in stocks of the past few months can be sustained through the final weeks of the year.
One area of nearly universal focus will be Tuesday's meeting of the Federal Reserve's interest-rate setting Open Market Committee. While Wall Street generally expects the FOMC to leave short-term interest rates at 5.25 percent, investors will pore over the statement that follows the meeting to glean a sense of when the central bank might lower rates. Since 2004, the central bank raised rates 17 straight times before leaving them unchanged at its last three meetings.
The Fed, ever vigilant about inflation, has been trying to engineer a soft landing for the economy. It has tried to apply the brakes to economic growth through higher rates without cooling growth too quickly and pushing the economy into recession. A strong employment report released Friday for November, though viewed largely as good news, damped some hopes that the Fed might be forced sooner than later to lower rates.
The report helped send stocks higher last week, however, with the Dow Jones Industrial average rising 0.93 percent, the Standard & Poor's increasing 0.94 percent and the Nasdaq composite index advancing 1.00 percent.
Whether the Fed can pull off the delicate balancing act of gradually slowing the economy remains to be seen, though many on Wall Street remain optimistic.
Beyond the Fed meeting, investors will be looking at retail sales figures for November to determine whether consumers are spending as much as hoped this holiday season. Reports from individual retailers have been mixed, making the government report all the more important.
Wall Street will receive reports from some of its own this week. Profits at brokerages are expected to be up sharply following the gains in stocks this year and a record level of mergers, which bring in big fees. Bear Stearns Cos., Goldman Sachs Group Inc. and Lehman Brothers Holdings report results in the coming week.
On Thursday, Treasury Secretary Henry Paulson, Fed Chairman Ben Bernanke and other key members of the administration economic team head to China to press for economic reforms aimed at loosening restrictions on currency and trade.