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THE WEEK AHEAD

Investors are looking to extend stock rally

All the major market indexes rose at least 4% last week as companies across almost every industry issued better-than-expected earnings reports or forecasts for the rest of this year.

July 27, 2009|Associated Press

A stock market that resumed its rally on upbeat earnings reports gets another batch of numbers this week -- and must decide whether to keep going or backtrack.

Over the last two weeks, the Dow Jones industrial average and Standard & Poor's 500 index have each jumped more than 11% as companies across almost every industry issued better-than-expected earnings reports or forecasts for the rest of this year.

"It was a tremendous week," said Maury Fertig, chief investment officer at Relative Value Partners. "From the earnings front, it really was the driver" of the market's momentum.

The week's earnings and a surprisingly good home resales report sent stocks soaring and reassured investors that Wall Street had in fact restarted the rally that stalled in mid-June over concerns about the economic recovery. All the major market indexes, including the Dow, S&P 500 and the Nasdaq composite index, rose at least 4% last week, and the Dow made it past 9,000 for the first time since early January.

This week, the question will be whether second-quarter results from major firms such as Visa Inc. and ExxonMobil Corp. will enable the market to extend those gains.

So far, surprises have been outpacing disappointments by about 3 to 1, Fertig estimated. But, he warned, "if the shift is to more disappointment than surprises, [markets] could give up some gains of the last two weeks."

Some of the firms reporting this week, including Colgate-Palmolive Co. and cereal maker Kellogg Inc., may give the market some insight into how consumers are feeling about their jobs, and in turn, about spending. Signs that they're cutting back on essentials could lead to a revival of worries about the economic recovery.

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At a glance

TODAY

Commerce Department releases new-home sales for June.

Treasury auction.

Quarterly earnings reports due from Amgen, Corning, Honeywell International and Verizon Communications.

TUESDAY

Conference Board releases consumer confidence index.

Standard & Poor's/Case-Shiller releases its May index of home prices.

Quarterly earnings reports due from DreamWorks Animation, U.S. Steel and Viacom.

WEDNESDAY

Commerce Department releases durable-goods data for June.

Federal Reserve releases "beige book" summary of regional conditions.

Quarterly earnings reports due from Visa, Aetna, General Dynamics Corp. and Time Warner and WellPoint.

THURSDAY

Labor Department releases weekly jobless claims.

Freddie Mac releases weekly mortgage rates.

Quarterly earnings reports due from Walt Disney, Colgate-Palmolive, Exxon Mobil and Kellogg.

FRIDAY

Commerce Department releases second-quarter gross domestic product.

Labor Department releases second-quarter employment cost index.

Quarterly earnings reports due from Chevron, Washington Post and Weyerhaeuser.

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