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The Week Ahead

Investors focus on housing data

June 18, 2007|From the Associated Press

The stock market is once again poised to set record highs, and Wall Street will be watching this week's data on the housing market to decide whether to forge ahead.

Today, the National Assn. of Home Builders will release its housing index for June. The May index registered 30, down from 33 in April, suggesting a deteriorating outlook for the housing market.

On Tuesday, the Commerce Department reports on housing starts and building permits. The market predicts that construction of new homes and apartments slipped in May, but that building permits rebounded from a 10-year low in April, according to economists surveyed Friday by Thomson Financial.

Although investors have recently been shrugging off weakness in the housing market, the snapshots could take on greater significance given the recent surge in Treasury yields. The 10-year Treasury note's yield peaked at a five-year high of 5.295% last Tuesday, then retreated to 5.16% by Friday.

Wall Street has been fairly confident that falling home prices and rising mortgage defaults won't damage the broader economy, but if mortgage rates -- closely tied to the 10-year Treasury note yield -- keep rising, fewer people will want to buy homes and fewer homeowners will be able to refinance.

If that happens, the residential real estate market's troubles could snowball, eat into consumer spending and dampen corporate profits.

On Thursday, the Conference Board releases its May index of leading economic indicators. The market expects an increase of 0.2% after a 0.5% decline in April.

Last week, the Dow Jones industrial average rose 1.6%, recovering from a brief sell-off triggered by rising Treasury yields after tame inflation data calmed jitters about an interest rate hike. The Standard & Poor's 500 index climbed 1.67% last week and the Nasdaq composite index gained 2.07%.

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At a glance

Today

Treasury bill auction.

Quarterly earnings report due from Sharper Image.

Tuesday

Commerce Department reports on housing starts for May.

Quarterly earnings reports due from Best Buy and Carnival.

House Financial Services Committee holds a hearing on consumers' ability to dispute and change inaccurate information on credit reports.

Wednesday

Quarterly earnings reports due from Circuit City Stores, FedEx and Morgan Stanley.

Thursday

Conference Board reports its monthly index of leading economic indicators.

Labor Department reports on weekly jobless claims.

Freddie Mac reports on mortgage rates.

Quarterly earnings reports due from American Greetings and H&R Block.

Source: Times staff and wire reports

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