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Preview / Sept. 25 -- Oct. 1

Data Could Clarify Picture for Investors

September 25, 2006|From the Associated Press

Investors who were tripped up last week by a dour manufacturing survey will be able to pore over a slew of economic data this week to assess whether the economy is slowing too quickly.

With a light corporate earnings schedule, many investors probably will spend the final week of the third quarter trying to gauge the health of the housing market, consumer sentiment and overall economic activity.

Last week Wall Street moved higher before receiving an unsettling regional snapshot Thursday from the Federal Reserve Bank of Philadelphia. The bank's manufacturing survey showed a negative reading for the first time since April 2003.

The report damped enthusiasm that followed Federal Reserve policymakers' widely expected decision a day earlier to leave short-term interest rates unchanged. Before the shift in sentiment, the Standard & Poor's 500 index neared a 5 1/2 -year high and the Dow Jones industrial average came within 100 points of its January 2000 closing high of 11,722.98.

Last week the Dow ended down 0.22%, the S&P 500 index was off 0.25% and the Nasdaq composite index fell 0.84%.

"I think we'll get a lot clearer picture [this] week on the economy," said Dean Junkans, chief investment officer for Wells Fargo Private Client Services. "I think there is still good underlying strength there. Have we slowed down? Yeah, we did. But it's not unusual for the summer to slow down."

Steven DeSanctis, small-cap strategist at Prudential Equity Group, contends that with Wall Street still rattled by the Philadelphia Fed data, investors will be anxiously awaiting any corporate earnings forecasts to gauge how profits are holding up as the economy slows. He believes that some of Wall Street's earnings forecasts will prove too upbeat and that the markets could see an increase in volatility if estimates are lowered.

"You get some pretty big moves in stock prices," DeSanctis said, referring to the periods in which most companies discuss their forecasts.

The flow of data begins today with the National Assn. of Retailers' report on existing-home sales in August. Investors are concerned that a slowing housing sector could hurt consumer spending more broadly and perhaps tug at the economy.

On Tuesday, the Conference Board is scheduled to release its consumer confidence index for September. Investors hope the survey will help show how consumers are faring as gas prices have eased in the last few weeks.

Then, on Wednesday, the Commerce Department is set to release its report on durable-goods orders, which could provide further insight into the health of the nation's manufacturing sector and whether demand will hold up. The department's report on new-home sales is also due Wednesday.

Thursday brings the Commerce Department's final revision on second-quarter gross domestic product, the broadest measure of the economy. Wall Street isn't expecting a change from the 2.9% growth reported in an earlier revision, though the figure is still regarded as significant.

On Friday, the Commerce Department rounds out its flurry of reports with figures on personal income and consumption. The same day, the Chicago purchasing managers' index is due. If, like the Philly Fed report, it shows a downturn in the regional economy, Wall Street could react badly.

Drugstore chain Walgreen Co. starts the week off with its report on fiscal fourth-quarter earnings, which are expected to total 41 cents a share.

Jabil Circuit Inc., which manufacturers printed circuit boards, is expected to report a fiscal fourth-quarter profit of 34 cents a share Tuesday.

Analysts expect McCormick & Co., a maker of spices and seasonings, to report a profit of 36 cents a share Wednesday for its third quarter.

Management and technology consulting firm Accenture Ltd. is expected to report fiscal fourth-quarter earnings of 38 cents a share Thursday.

From the Associated Press

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The Week Ahead

Today

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

* Treasury bill auction.

Tuesday

* Conference Board reports monthly consumer confidence index.

* Sentencing of Andrew S. Fastow, former chief financial officer at Enron Corp.

Wednesday

* Commerce Department reports on durable-goods orders for August.

Thursday

* House Commerce panel holds hearing on privacy violations at Hewlett-Packard Co.

* Commerce Department reports on gross domestic product, second quarter.

* Labor Department reports on weekly jobless claims.

* Freddie Mac reports on mortgage rates.

Friday

* Commerce Department reports on personal income and spending for August.

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