Hoping for Momentum During the Dog Days

August has been an unusually busy time for Wall Street, with a key Federal Reserve decision and surprisingly good economic data keeping investors busy, culminating in a strong rally last week that pushed the major indexes to three-month highs.

This week, however, is likely to be the Wall Street equivalent of a humid, hazy, summer Sunday afternoon -- slow.

With barely any corporate earnings of note and no economic data due until Wednesday, Wall Street’s biggest challenge will be preserving the momentum from last week, or at least not losing ground.

Benign inflation data last week, including an unexpected drop in core wholesale prices, led many investors to believe that the Fed’s decision to stand pat on interest rates two weeks ago was the right one.

Further, it now seems less likely that the Fed would resume raising again, at least for the short term.

However, though stocks rallied sharply Tuesday and Wednesday, trading Thursday and Friday was thin, and the indexes were little changed.

If the markets can hold on to their gains in a week with little reason to even trade, it could bode well for extending the rally into September, when there might be news worth acting on.

Last week, the Dow Jones industrials rose 2.65%, the Standard & Poor’s 500 index gained 2.81% and the Nasdaq composite surged 5.16%.

The National Assn. of Realtors will issue its existing-home sales report for July on Wednesday, which will be closely watched by investors in the housing sector. Existing sales are expected to slip to an annualized rate of 6.58 million, compared with 6.62 million for June.

On Thursday, the Commerce Department reports on new-home sales in July, which are expected to have fallen to 1.1 million from 1.13 million in June.

Both housing reports will probably spur activity in the housing and construction sectors, but unless numbers are far worse than expected, the overall market may take little note.

Also Thursday, Commerce will issue its July report on orders for durable goods, defined as big-ticket items expected to last at least three years.

Durable goods orders are expected to be flat in July, compared with a sharp 2.9% jump in June.

From the Associated Press

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The Week Ahead

Today

* Treasury bill auction.

Tuesday

* Quarterly earnings reports due from Intuit Inc., Borders Group Inc., Medtronic Inc.

Wednesday

* National Assn. of Realtors reports on existing-home sales for July.

* Earnings reports due from Michaels Stores Inc., Smithfield Foods Inc.

Thursday

* Commerce Department reports on durable goods orders and new-home sales for July.

* Labor Department reports on weekly jobless claims.

* Freddie Mac reports on mortgage rates.

* Earnings reports due from Williams-Sonoma Inc., Hormel Foods Corp., J. Crew Group Inc.

Friday

* Federal Reserve opens its annual retreat at Jackson Hole, Wyo. Chairman Ben S. Bernanke speaks on global economic integration.

From the Associated Press