Wall Street Battle: Hope From Rate Cuts Versus Earnings
U.S. stocks are likely to move sideways with no major spikes or dips as Wall Street starts to face a vacuum with the corporate earnings season winding down and little key economic data guiding trade. This leaves investors in a tug of war between the reality of economic and earnings deterioration and the hope for a future boost from January’s two deep interest rate cuts by the Federal Reserve and more possible cuts down the road. Among big companies reporting will be entertainment giant Walt Disney Co. on Tuesday. Market watchers also will dissect the scorecard of Internet infrastructure giant Cisco Systems Inc., due after the closing bell Tuesday. But barring any bombshells, many see a limited impact, especially after Cisco’s Chief Executive John Chambers already has cautioned investors that the current fiscal quarter was more challenging than believed a few weeks ago. The Fed last Wednesday slashed the key funds rate by half a percentage point, saying the threat of an economic slump required a “rapid and forceful response,” and vowed to do even more if needed. (Reuters)
Economic reports due this week:
* Wednesday, the Labor Department will report on productivity in the fourth quarter. It stood at 3.3% in the third quarter.
* Wednesday, the Federal Reserve will report on consumer borrowing through credit cards, auto loans and other personal installment loans for December. Borrowing rose $12.9 billion during November.
* Thursday, the nation’s major retailers report same-store sales for January.
* Thursday, the Labor Department will report on first-time claims for state unemployment benefits for the week ended Feb. 3. They rose 32,000 the previous week to 346,000.
* Thursday, the Commerce Department will report on inventories at U.S. wholesalers during December. They rose 0.4% in November as consumer spending cooled.
