Investors are uneasy going into this week, which will bring two reports on April home sales and the latest assessment of consumer confidence. They're also nervous about next week's widely expected bankruptcy filing by General Motors Corp.
"There are some big, big, big issues going on right now," said Tommy Williams, president of Williams Financial Advisors in Shreveport, La. "I don't think any one of them are going away this summer."
The major indicators managed to eke out gains last week. The Dow Jones industrials gained 0.10%, while the Standard & Poor's 500 index rose 0.47%.
The first test of the market's ability to build on those numbers comes Tuesday, when the Conference Board releases its May consumer confidence index. The reading should provide some insight into consumers' willingness to spend.
But Ron Weiner, president and chief executive of RDM Financial in Westport, Conn., says that although any positive news about consumers would be welcome, the market is likely to have just a short-term upward blip.
"We want the consumer to be out there, we want them to spend," Weiner said. "For the most part, however, we don't see [that] consumers [are] going to pull us out of this economy because they are also paying down debt at the same time."
Investors are also mindful of the Commerce Department's disappointing retail sales report for April, which took the market by surprise May 13 and sent stocks plunging.
On Wednesday and Thursday, investors will get reports on sales last month of new and previously owned homes. A government report is also due on U.S. home prices during the first quarter of 2009.
The housing data could be a big force in shaping investors' attitudes. A housing recovery is crucial to helping consumers feel more confident and to enabling banks to worry less about eroding asset values.
Wall Street has been trying to get a read on the housing market for months and has responded enthusiastically to any signs that the slump is leveling off. Stocks surged more than 3% on May 4 following unexpected increases in pending home sales and construction spending. But a big inventory of unsold homes and record foreclosures are swallowing much of the demand, making it hard for prices to stabilize.
"We are getting to the point of the year where we are getting into the peak home sales season," said Kevin Shacknofsky, co-portfolio manager of the Alpine Dynamic Dividend Fund in Purchase, N.Y. "The numbers now will be far more important."
