Markets to Watch for Indicators of Fed’s Next Move

The calendar of economic data is light this week, but financial markets will be keeping their eyes peeled for figures on the federal budget, wage inflation and durable goods as they ponder what the Fed’s next move will be. There may be some hint of that Thursday when Federal Reserve Chairman Alan Greenspan testifies before the Senate Budget Committee. Although fiscal issues will be the topic of discussion, traders will be watching for any signal of the Fed’s next decision on interest rates. Meanwhile on Thursday, the government will issue its employment cost index (ECI) for the fourth quarter of 2000. The ECI measures inflation in wages, the threat of which has been a thorn in the Fed’s side amid tight labor market conditions. U.S. economists on average predicted that the ECI rose 1.1% in the fourth quarter, up from a 0.9% gain the previous quarter, according to a Reuters survey. The government also is expected to issue figures Friday on orders for durable goods--things such as refrigerators and washing machines--for December. Economists anticipate a 1.7% drop in December orders after November’s 2.5% gain. The numbers could give clues to whether consumer spending has slowed.

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Other economic reports due this week:

* Monday, Wall Street gets a look at the federal budget for December, which economists on average expected to be up $33.29 billion versus November’s $23.69-billion drop.

* Tuesday, the Conference Board will issue its index of leading economic indicators--a gauge of growth over the next half a year--for December. The LEI hasn’t registered an increase since a 0.1% gain last March.

* Thursday, the National Assn. of Realtors will issue its December report on sales of previously owned homes.