Wall Street's steep gains in the final days of October are leaving some investors optimistic that the market has put its scariest days behind it, but they're still wary about land mines that could send stocks reeling again.
Tuesday's presidential election could help erase some unknowns over how the power structure in Washington will affect investors, but pressing economic questions could ultimately shape the week.
Reports due on manufacturing, the service sector and, most important, employment, could determine whether the market stays above its mid-October lows and holds on to some stability.
Sunday, stock index futures signaled a moderately lower open. The market's volatility in September and October, however, has made futures a less reliable indicator of how the market will indeed open.
Some analysts believe Wall Street's wild ride is not yet over.
"There is a saying that bear markets end in exhaustion," said Axel Merk, portfolio manager at Merk Funds, suggesting the market isn't at that point.
To carve out a sustained advance, Wall Street will need to look past dispiriting signposts about the economy, he said.
"If the market reacts positively to bad news that would be a very positive sign," Merk said. Last week, investors did manage to write off some weak readings on personal spending and consumer confidence.
There are other positives emerging, Merk and others note: Some sources of selling pressure are easing as nervous investors abandon the market.
The chief worry that set off the market's year-old decline, the housing market, remains, Merk noted. "We haven't seen the bottom yet in the housing market and ultimately that's the problem," he said.
Investors are hoping the Dow can continue to trade above its Oct. 10 close of 8,451.19, its lowest finish since April 2003. The S&P 500 also recorded a low Oct. 10 of 899.22.
But even with the partial recovery last month, it's impossible to know whether the market, down 38% from its October 2007 peak, has adequately priced in the effects of a tough economy.
Georges Ugeux, chairman of Galileo Global Advisors, contends troubled debt from credit cards, for example, could emerge as a heightened worry as the economy slows.
While the markets showed more orderly trading of late, this week brings more economic data that could unnerve Wall Street.
Friday brings what is widely seen as the week's most important report, the Labor Department's October employment figures. Wall Street remains nervous that jumps in unemployment will erode confidence in the economy and cause nervous consumers, even those still employed, to pare their spending. That is a worrisome prospect as consumer spending accounts for more than two-thirds of U.S. economic activity.
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At a glance
Institute for Supply Management releases its manufacturing index.
Commerce Department releases construction spending for September.
Major automakers report
U.S. auto sales.
Quarterly earnings reports due from Viacom, Belo and MasterCard.
Commerce Department releases factory orders for September.
Quarterly earnings reports due from Archer Daniels Midland, Marvel Entertainment and Tenet Healthcare.
Institute for Supply Management releases its non-manufacturing index.
Quarterly earnings reports due from Cisco Systems Inc., Molson Coors Brewing, News Corp., Time Warner and Whole Foods Market.
Major department stores report October sales results.
Labor Department releases weekly jobless claims and productivity results for the third quarter of 2008.
Quarterly earnings reports due from DirecTV Group, Qualcomm and Walt Disney.
Labor Department releases unemployment data for October.
Federal Reserve releases consumer credit data for September.
European Union leaders hold special meeting in Brussels to discuss reforms of international financial system ahead of economic summit in Washington on Nov. 14.
Quarterly earnings reports due from Ford Motor and Sprint Nextel.
Brazil hosts G20 meeting for finance ministers and central bank presidents in Sao Paulo.