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Preview / WEEK OF MAY 5 -- 11

Eyes on Fed Rate Move, Cisco Earnings Report

May 05, 2003|From Reuters

Wall Street, upbeat because of U.S. corporate profits, will take its cue from the Federal Reserve's policy meeting on interest rates and quarterly earnings from tech bellwether Cisco Systems.

Investors do not expect a change in the level of interest rates, which are at four-decade lows. With a dearth of economic data, the market wants to see the central bank's comments to gauge the thinking of Fed Chairman Alan Greenspan and his colleagues on the Federal Open Market Committee, which meets Tuesday.

"The Fed chief and other top officials have said they expect the economy to improve later this year," said Stanley Nabi, managing director at Credit Suisse Asset Management. "So with that expectation I don't think they will cut rates."

On the data front, the pickings are slim. Investors will get a reading on the giant U.S. services sector today and on March wholesale inventories on Wednesday. March consumer credit data will be issued midweek, and weekly jobless claims will be released Thursday.

Corporate America's earnings flood slows as the majority of companies in the Standard & Poor's 500 index have handed in financial results for the first quarter. Still, a key scorecard comes after Tuesday's close from Cisco, the top Internet gear maker central to the technology food chain.

Overall the profits picture has been improving. With 416 of S&P 500 companies having reported so far, earnings are up 13.8% from a year earlier, according to Thomson First Call.

Besides Cisco, earnings that may grab attention include those from insurer MetLife, drugstore chain CVS Corp., video game maker Electronic Arts and consumer products maker Gillette Co.

Today's Institute for Supply Management non-manufacturing report is expected to show some contraction in the services sector, with the index set to come in at 48.8, up from 47.90 in March, but still below the 50 mark separating expansion from contraction.

Consumer credit information Wednesday is expected to show that consumers ran up debt at a higher clip in March. Economists see credit outstanding up $3 billion versus February's $1.5 billion. Thursday's numbers are likely to show that the number of Americans filing for first-time unemployment benefits fell to 438,000 in the week of May 3, from 448,000 in the previous week.

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