The Week Ahead - Wall Street watching retail sales in final hours before Christmas
NEW YORK -- — With Wall Street itching for an end-of-the-year surge but still somewhat nervous about consumer spending, Americans' shopping patterns in the last hours before Christmas could make or break a "Santa Claus rally."
It's possible last week's stock gains marked the start of the big advance typically seen in the last week of one year and the first week of the next. But with home prices still falling and oil and food prices elevated, it's certainly not a given.
Even less of a guarantee is whether the market can hold on to any gains made in the upcoming weeks if consumers' spending power weakens.
Usually the fourth quarter is a strong one for the market, partly because it's when people do the most shopping. But the Dow Jones industrial average -- unless it rises at least 445 points over the next five trading days -- will post its first fourth-quarter drop since 1997.
Ending the year at Friday's level of 13,450.65 would bring the blue-chip index its widest fourth-quarter loss since 1987.
Last week, the Dow ended 0.8% higher, the Standard & Poor's 500 index finished up 1.1% and the Nasdaq composite index rose 2.1%.
A Commerce Department report on Friday showing that November sales outpaced expectations helped lift stocks, along with a hefty profit gain at Research in Motion Ltd., the maker of the BlackBerry, and word that Merrill Lynch would get a $5-billion cash infusion from overseas.
However, last Friday's huge number of contract expirations may have distorted the market's performance. Moreover, the Commerce Department report indicated that inflation, even after stripping out food and energy costs, was accelerating and that Americans were saving less.
This afternoon, ShopperTrak RCT Corp. releases sales data from the last Saturday before Christmas, or "Super Saturday." The stock market will close today at 10 a.m. PST for Christmas Eve and will remain closed Christmas Day.
On Wednesday, the International Council of Shopping Centers releases its weekly chain-store sales index, and Thursday, the Conference Board releases its measure of December consumer confidence. Economists surveyed by Thomson Financial predict confidence slipped this month compared with November.
Industry data so far have shown weak spending patterns for December. ComScore Inc. said last week that online sales from Nov. 1 through Dec. 14 rose less than projected and by a smaller amount than last year, and brick-and-mortar stores have also reported sluggish sales.
