Housing data could set tone on Wall St.

L.A. Times Archives

Aug. 20, 2007 12 AM PT

From the Associated Press

new york -- The Federal Reserve may have thrown Wall Street a bone Friday by lowering the rate it charges banks, but if this week’s housing market data and corporate headlines portend more gloom, it may have to toss another.

So far, Wall Street, beset by fears that credit problems in mortgage and corporate lending will cripple the economy, has been stubbornly signaling to the central bank that it wants a bailout -- ideally, by way of a cut in the benchmark federal funds rate.

Meanwhile, Asian stocks today were mounting their biggest rally in more than three years after the Fed’s move last week. Japan’s Nikkei average was up 3.7% by the end of morning trade, on track for its biggest one-day percentage rise since March 2002 and recovering from its biggest fall in nearly six years on Friday.

With the Fed’s next meeting not scheduled until Sept. 18, U.S. investors may stay jittery over the coming weeks as they watch the central bank to see whether it will lower rates before then.

Stocks got a boost Friday, thanks to the cut in the Fed’s discount rate, but few market participants are breathing a sigh of relief yet.

Many on Wall Street are still in panic mode; even after the Fed started injecting large amounts of cash into the banking system through repurchase agreements two weeks ago, the Dow Jones industrial average continued on its steep downward slope, sliding 812 points over six trading days.

Last week, the Dow finished down 1.2%; the Standard & Poor’s 500 index ended down 0.5%; and the Nasdaq composite index ended down 1.5%.

This week is light on economic data, so it’s improbable that the market will garner any lasting direction from upcoming reports. One piece of data that will be widely watched, though, is the Commerce Department’s report Friday on new-home sales and prices. Economists surveyed last Friday by Thomson Financial estimated, on average, that sales of new single-family homes fell slightly in July.

Most likely, Wall Street will keep an eye out for any indications from the Fed that it might take more steps to prevent the stock market from falling further, and any news from lenders or hedge funds about the state of the credit environment.

This week won’t bring a huge number of quarterly financial results, but there are a few, such as those by retailer Target Corp. and home builder Toll Bros. Inc., that investors will be watching for insight into consumer spending and the housing market.

At a Glance

Today

Treasury bill auction.

Conference Board reports its monthly leading economic indicators index.

Quarterly earnings report due from Lowe’s.

Tuesday

Quarterly earnings reports due from BJ’s Wholesale Club, Saks, Staples, Cargill and Target.

Wednesday

Quarterly earnings reports due from Abercrombie & Fitch, Limited Brands and Toll Bros.

Thursday

Labor Department reports on weekly jobless benefit claims.

Freddie Mac reports on mortgage rates.