Data on home sales, GDP to be released
The Federal Reserve’s stance on interest rates helped spark a comeback on Wall Street last week, and investors are hoping that this week’s data on new-home sales, gross domestic product and personal spending will add momentum to the rally.
The market is still showing signs of volatility, but investors are tentatively optimistic about its recovery after the Dow Jones industrials posted their best weekly point gain in four years and returned to positive territory for the year.
The index jumped 159 points Wednesday after a Fed statement appeared to raise the possibility of a rate cut this year, a move the market hopes will encourage consumer spending.
But because worries continue to plague the market over sub-prime lenders’ troubles and the slow housing market, investors will closely read the Commerce Department’s report today on February new-home sales.
Analysts expect a rise to 995,000 from 937,000 in January. On Friday, the National Assn. of Realtors reported a 3.9% surge in February existing-home sales.
On Thursday, the Commerce Department will give its final measure of fourth-quarter GDP. Analysts are forecasting a reading of 2.2% growth, in line with the government’s previous estimate.
If the GDP is revised lower, worries could arise that core inflation -- which rose 2.3% for the 12 months that ended in January, above the Federal Reserve’s 1% to 2% comfort zone -- is outpacing GDP growth by too much, and that the Fed might lean toward a rate hike later in the year to curb rising costs.
On Friday, the Commerce Department reports on personal income and spending for February. The market expects both income and spending to rise by 0.3%, a slower pace than in January.
In addition to economic data, the markets will be girding for next month’s onslaught of financial reports by watching for profit warnings. Last week, technology stocks stumbled a bit after cellphone maker Motorola Inc. warned it would post a first-quarter loss.
Investors will also keep an eye on comments by Federal Reserve Chairman Ben S. Bernanke on Wednesday, energy prices and political developments between the U.S. and Iran, as well as North Korea.
The Dow climbed 3.1% last week, bringing it within 151 points of its level on Feb. 26, the day before it plunged 416 points in one session. The Standard & Poor’s 500 index rose 3.5% last week, and the Nasdaq composite index gained 3.5%.
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The week ahead
Today
* Commerce Department reports on new-home sales for February.
* Treasury bill auction.
* Quarterly earnings reports due from Dollar General, Tiffany and Walgreen.
Tuesday
* Conference Board reports its monthly consumer confidence index.
* Quarterly earnings report due from Lennar.
Wednesday
* Commerce Department reports on durable goods orders for February.
* Fed chief Bernanke testifies on the economy before the Joint Economic Committee.
Thursday
* Commerce Department issues final report on gross domestic product for the fourth quarter of 2006.
* Labor Department reports on weekly jobless claims.
Friday
* Commerce Department issues reports on February personal income and spending as well as construction spending.
