Earnings, Economic Data Expected to Pour In

U.S. investors face a mind-numbing pile of information this week as corporate earnings and economic data pour in, Federal Reserve Chairman Alan Greenspan speaks and the presidential election heads toward the homestretch.

But crude oil prices will remain near the top of investors’ watch lists.

Oil touched a record $55 a barrel in New York trading Friday before contracts for November delivery closed at $54.93, up 17 cents for the day.

“Unless oil drops dramatically, earnings are probably more of a key driver of the market next week,” said John Caldwell, chief investment strategist at McDonald Financial Group. “The market has been dealing with the steady drumbeat of higher energy prices, and the big swing would happen, I think, if prices fell unexpectedly.”

A slew of companies are scheduled to report quarterly earnings, including nearly half of the 30 companies whose stocks make up the Dow Jones industrial average.

Earnings will be scrutinized for clues on the health of both the economy and various sectors.

“Although we don’t own them, I’ll be looking at IBM because they are a bellwether,” said Ray Rund, a managing director at Shaker Investments. “If they’re doing well, it bodes well for the tech sector. If they’re not doing well, it probably indicates a soft patch in IT [information technology] spending.”

Last week 40 companies in the Standard & Poor’s 500 index reported earnings. Of that group, 24 topped Wall Street estimates, eight were in line with estimates and eight missed.

Key economic data expected this week include housing starts and the U.S. consumer price index for September, which will provide a reading on inflation.

“We are going to have some good data on Tuesday, and the critical element will be in the CPI. It’s where people are going to look for some spillover of the oil issue and other core components,” said Ned Riley, chief investment strategist at State Street Global Advisors.

Extra attention will be paid to the presidential election as the campaign heats up in the remaining two weeks before polls open Nov. 2.

Generally, Wall Street favors President Bush for reelection, and stocks have tracked his gains in opinion polls. But the race has tightened, leaving the outcome less clear.

“I’m not convinced that a Bush win would be overall good for the country in the longer term, although a lot of people on Wall Street tend to favor a Republican administration,” Shaker Investments’ Rund said. “When we had job growth and a balanced budget, things seemed to go well on Wall Street, and the last time we had that was in the Clinton administration.”

Wall Street will also listen closely to remarks from Greenspan, who is scheduled to speak on the mortgage market and consumer debt before a group of bankers Tuesday.