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January 9, 2007 > Investors to examine steady stream of economic data, earnings

Investors to examine steady stream of economic data, earnings

By TIM PARADIS, AP Business Writer

NEW YORK (AP), Jan 05 _ Investors will begin the second week of the year hoping for more clarity about the direction of the economy, and in turn, the markets, after Wall Street's lackluster start to 2007.

A steady feed of economic data and a trickle of big earnings in the coming week might help the market find balance and pick a direction. Last week, Wall Street saw big shifts in momentum, rising first on news of strength in manufacturing, but stumbling amid concerns that the Federal Reserve might actually raise interest rates and not lower them, as some analysts had started to forecast.

Investors often like to talk about the early days of January setting a tone for the year, so it's understandable if some are feeling discouraged after last week's mixed performance. The Dow Jones industrial average fell 0.52 percent and the Standard & Poor's 500 index fell 0.61 percent, while the Nasdaq composite index added 0.78 percent.

Investors have been trying to square their desire for the economy to slow with their hope that it not cool too quickly and risk spinning into recession. Wall Street wants growth to slow to force inflation lower and therefore draw the Fed into lowering short-term rates.

ECONOMIC DATA

On Monday, investors expect the Fed to release its consumer credit report for November. It is a sometimes volatile reading of consumer debt. On Tuesday, the International Council of Shopping Centers, a trade group, is expected to release a report on weekly chain-store sales.

Wednesday is expected to bring weekly crude inventory data. Oil prices have fallen sharply since the start of the year as unseasonably high temperatures in much of the country have hurt demand for home heating oil. The Commerce Department's report on the November trade deficit is also due.

Thursday brings weekly reports on jobless claims. Last week, investors frowned on a jobs report that showed strong hiring in December and that unemployment remained near a five-year low. Wall Street was concerned that a scarcity of workers would make it harder for businesses to hire and retain workers. Persistent wage inflation could make the Federal Reserve less likely to lower interest rates. The central bank, which remains vigilant about inflation, has left rates unchanged at its last four meetings after raising them 17 straight times before that.

Then, on Friday, investors expect figures from the Commerce Department on import and export prices for December. The data help illustrate what consumers pay for foreign-made goods.

Retail sales figures for December from the department will likely confirm what Wall Street already knows: The holiday season was a disappointment for most retailers.

Also due that day are Commerce Department reports on business sales and inventories.

EARNINGS

Alcoa kicks off the quarterly earnings season when it reports fourth-quarter results on Tuesday. The aluminum company is expected to be a litmus test for both analysts and economists to determine the pace of U.S. manufacturing.

The company, one of the 30 whose stocks make up the Dow, is expected to report an 88 percent rise in earnings per share _ to 66 cents from 35 cents _ according to analysts polled by Thomson Financial. Revenue is expected to hit $7.6 billion for the quarter.

Shares of the company closed at $28.76 on Friday and have traded between $26.39 and $36.96 in the past 52 weeks.

On Wednesday, biotechnology company Genentech Inc. is expected to report results of 55 cents per share compared with 34 cents a year earlier. Analysts expect the company to post $2.53 billion of revenue during the quarter. Shares closed at $83.68 Friday, and have traded within a 52-week range of $75.58 and $94.46.

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