Investors expected to focus on Fed meeting
After another record-setting week in which the Dow Jones industrial average closed above 12,000 for the first time, investors will sift through earnings reports and key economic data in hopes of determining whether the market’s run-up will continue.
Much of the economic discussion will focus on the Federal Reserve, which begins a two-day meeting Tuesday. Although the central bank is expected to leave short-term interest rates unchanged, investors will be eager to obtain the Fed’s latest assessment of the economy, which is due to be released Wednesday after the meeting.
The rally in stocks in the third quarter and this month has occurred in part because recessionary concerns have given way to a sense that the cooling economy is headed for a soft landing.
Some investors had questioned whether the Fed went too far in its push to contain inflation when it raised interest rates 17 straight times over two years before pausing in August.
Beyond the Fed meeting, investors expect to receive data on home sales and on the nation’s gross domestic product, the broadest measure of the economy.
Big-name earnings are likely to hold sway over sentiment as they did last week when IBM Corp.'s profit report first pushed the Dow past 12,000.
The Dow ended the week up 0.4%, while the Standard & Poor’s 500 index was up 0.2% and the Nasdaq composite index was down 0.6%. In the coming week, investors expect to hear from American Express, DuPont and Microsoft.
Other forces could affect the markets. Oil prices hit a low for the year Friday amid skepticism about whether OPEC would implement the production cut that it approved Thursday. Also, tensions with North Korea over its nuclear ambitions could heat up.
The health of the housing sector also remains a concern as investors try to determine whether a slowdown will dent growth elsewhere in the economy.
From the Associated Press
The week ahead
* Treasury bill auction.
* Sentencing for former Enron Corp. Chief Executive Jeffrey K. Skilling, convicted of conspiracy and fraud.
* Quarterly earnings reports due from Amgen, Netflix, American Express, AT&T;, Ford Motor, Hasbro, Kimberly-Clark, Kraft Foods, Texas Instruments and Xerox.
* Federal Reserve’s Open Market Committee begins two-day meeting to discuss interest rates; decision to be announced Wednesday.
* Quarterly earnings reports due from Northrop Grumman, Alaska Airlines, Amazon.com, Ameritrade Holding, BellSouth, Burlington Northern Santa Fe, Corning, DuPont, JetBlue Airways, Lockheed Martin, Lucent Technologies, Seagate Technology and Whirlpool.
* National Assn. of Realtors reports on sales of existing homes in September.
* Quarterly earnings reports due from Anheuser-Busch, Boeing, Colgate-Palmolive, ConocoPhillips, DaimlerChrysler, General Motors, Harrah’s Entertainment, ImClone Systems, Norfolk Southern, Pulte Homes, RadioShack, Reynolds American and Weyerhaeuser.
* Commerce Department reports on durable goods orders for September and on new-home sales for September.
* Labor Department reports on weekly jobless benefit claims.
* Freddie Mac reports on mortgage rates.
* Quarterly earnings reports due from Sun Microsystems, Aetna, Bristol-Myers Squibb, Comcast, Dow Chemical, ExxonMobil, Kellogg, Microsoft, NYSE Group, Raytheon, Sprint Nextel, US Airways Group and Wendy’s International.
* Commerce Department reports on gross domestic product, third quarter.
* Quarterly earnings reports due from Chevron, Avon Products and Cardinal Health.