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The Week Ahead

Data expected on productivity, trade

June 04, 2007|From the Associated Press

Summer's almost here, and investors will be watching to see whether this week's economic data and the recent deal-making surge can keep stocks from succumbing to the seasonal doldrums.

Wall Street continues to push the Dow Jones industrials to new record highs and just last week nudged the broader Standard & Poor's 500 index into record territory for the first time in more than seven years.

Investors, however, are wondering whether the coming months will bring enough good news to propel stocks even higher.

Takeover activity will play a key role in the stock market's direction going forward; it's on pace to beat last year's record tally of $4 trillion, which has given investors confidence that corporate America is weathering the recent economic slowdown well and has a lot of cash.

However, with Wall Street betting on an economic recovery later in the year and on an eventual interest rate cut by the Federal Reserve, any evidence to the contrary might knock the market down.

Investors will be looking closely at the Institute for Supply Management's May index on the nation's service economy, scheduled to be released Tuesday.

According to the median estimate of economists surveyed Friday by Thomson Financial, the market expects the index to slip to 54.0 from April's reading of 54.7.

A reading above 50 indicates expansion in the service sector, a diverse group of industries that represents about 80% of U.S. economic activity and includes retailing, banking, construction and agriculture.

On Friday, the focus will be on the international trade balance. The market predicts the Commerce Department will report that the trade deficit narrowed to $63.1 billion in April, after widening to a six-month high of $63.9 billion in March.

The Commerce Department reports today on April factory orders, which are expected to have risen 0.7% after a 3.1% jump in March.

The Labor Department on Wednesday releases its revised reading on first-quarter worker productivity growth. The market anticipates the figure will be 1.5%, down from the previous estimate of 1.7%.

Last week, the Dow posted a 1.2% gain, the S&P 500 index rose 1.4% and the Nasdaq composite index added 2.2%.

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At a glance

Today

Commerce Department reports on factory orders for April.

Treasury bill auction.

Quarterly earnings report due from Krispy Kreme Doughnuts.

Senate scheduled to resume consideration of an immigration bill.

Tuesday

Institute for Supply Management issues its report on activity in the non-manufacturing economy for May.

Senate Governmental Affairs subcommittee on investigations holds hearing on executive stock options.

Wednesday

President Bush attends Group of 8 summit in Germany.

Labor Department issues revised reports on productivity and costs for the first quarter of 2007.

Quarterly earnings report due from defense contractor SAIC.

Thursday

The nation's largest retailers announce their sales figures for May.

Labor Department reports on weekly jobless claims.

Federal Reserve reports on consumer credit for April.

Freddie Mac reports on mortgage rates.

Quarterly earnings reports due from National Semiconductor and Smithfield Foods.

Friday

Commerce Department reports on international trade for April.

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Source: Times staff and wire reports

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