WEEK OF MAY 26- JUNE 1

Housing, Other Data Expected This Week

Investors could demand proof of a rebounding economy this week after pushing the S&P; 500 up 16.5% since mid-March, but a rush of data could make many pine for another three-day weekend.

The stock market is closed today for Memorial Day. The shortened week probably will be quiet as investors tack on extra vacation days to their long weekend.

The lack of participation, plus nagging worries over the economy’s health, may leave stocks bobbing near the unchanged mark.

This week “is going to be a big gray area,” said Steve Kolano, an equity trader at the Boston Co. Asset Management.

The week will be chock full of data -- ranging from reports on home sales and durable goods to a fresh read on first-quarter economic growth and snapshots of May consumer sentiment. But the reports, which are not likely to point to a strong recovery, may keep investors sidelined after stocks’ big upturn over the last two months.

“Most people believe the bear market is over, but the stock market is waiting for more definitive economic reports that show strength that is better than mediocre,” said Paul Cherney, chief real-time market analyst at S&P; Marketscope.

Federal Reserve Chairman Alan Greenspan held out hope the U.S. economy would pick up its pace in his remarks to Congress last week. But he warned that the central bank was watching for the threat of deflation. Investors’ fears of deflation mounted after producer and consumer price data showed inflation was barely on the radar screen.

The deflation worries are adding to concerns over an anemic economic recovery. The market has rallied over the last few months on bets the economy will gather steam later in 2003. But a stream of reports this week isn’t expected to offer much evidence of that.

On Tuesday, the report on new-home sales for April is expected to show a drop of about 15,000 units in March. Another report is expected to show that sales of previously owned homes edged up to a seasonally adjusted annualized rate of 5.67 million units in April from 5.53 million in March, according to some economists.

Later in the week, the Commerce Department is expected to report that orders for durable goods, or big-ticket items such as washing machines and cars, fell 1% in April after rising 1.5% in March. And a report on gross domestic product is expected to show that the economy grew at a rate of 1.9% in the first quarter, slightly better than the 1.6% rate previously reported for the quarter.

Two surveys on consumer sentiment, one from the University of Michigan and the other from the Conference Board, will grab attention this week as well. Consumer confidence is seen as a predictor of consumer spending, which drives two-thirds of the U.S. economy.

The market also will watch weekly jobless claims this week.

Here is a rundown of some of this week’s key events:

Tuesday: National Assn. of Realtors reports on existing-home sales for April; Commerce Department reports on new-home sales for April; Treasury bill auction; Conference Board reports on consumer confidence in May.

Wednesday: Commerce Department reports on durable-goods orders for April.

Thursday: Commerce Department reports on gross domestic product in the first quarter; Labor Department reports on weekly jobless claims; mortgage company Freddie Mac reports on mortgage rates.

Friday: Commerce Department reports on personal income and spending for April.

From Reuters and Associated Press

*

Judge to Rule on

Music Settlement

A federal judge in Maine plans to rule this week on the proposed settlement of a music antitrust lawsuit that would put about $12.60 in the pockets of 3.5 million consumers.

Judge D. Brock Hornby heard testimony for more than three hours Thursday on the fairness of the agreement that calls for music distributors and retailers to pay $143 million in cash and compact discs.

Terms of the settlement call for checks to be mailed to 3.5 million people who filed claims under the class-action lawsuit. The actual amount depends on how much money goes to lawyers and distribution fees.

The payout would culminate an antitrust suit that was started by prosecutors in several states in 1996.

The lawsuit was signed by the attorneys general of 43 states, including California, and territories and was consolidated in Portland, Maine, in October 2000.

It accused major record labels and large music retailers facing competition from discount retailers such as Target and Wal-Mart of conspiring to set minimum music prices.

The settlement amounts were determined by market share.

According to court records, Vivendi Universal’s Universal Music Group, the largest music distributor, must pay the most -- $40.6 million in cash and CDs. AOL Time Warner Inc.’s Warner Music Group agreed to pay $29.4 million in cash and CDs; Sony Music, $27.2 million; Bertelsmann, $27.8 million; and EMI Group’s EMI Music, $15 million.

The retailers -- Musicland Stores Inc., Trans World Entertainment Corp. and Tower Records -- must pay a combined $3 million, according to court records.

The defendants deny any wrongdoing.

Of the total settlement amount, $75.7 million would be distributed in the form of 5.6 million music CDs sent to libraries and schools throughout the nation.

The proposed cash settlement in the case totals $67.3 million. The actual cash distributed to the public is expected to be about $44 million.

Payments should be mailed out within weeks of the settlement’s approval.

The remaining cash will be eaten up by distribution costs and attorney fees.

About 3.5 million U.S. residents who purchased music from 1995 to 2000 registered for claims in the price-fixing suit against major record labels and large music retailers.

The settlement also prohibits major music distributors from tying cooperative advertising efforts to retailers’ advertised prices.

From Times Staff and Wire Reports