NEW YORK — After two weeks of little on the data or
corporate-earnings fronts, the U.S. stock market is getting a slew of economic
reports this week, starting with Monday’s existing-home sales jump in October.
Investors are puzzled about the strength of the recovery,
and economic reports this week “may set the tone for the market’s year-end
behavior,” according to Howard Ward, chief investment officer for GAMCO
Growth Fund.
“With it being a holiday week so close to month’s end,
a great deal of economic data is going to get packed into Tuesday and Wednesday,”
said Mike O’Rourke, chief market strategist at BTIG LLC.
Starting off on a positive note, the National Association of
Realtors estimated that the sale of existing U.S. homes climbed 10.1 percent in
October, as many rushed to beat the deadline for the tax credit for first-time
home buyers.
“The shocking number released for existing-home sales
isn’t just a critical turning point for the beleaguered sector, but also the
financial institutions providing the mortgages to would-be buyers,” said
Todd Schoenberger, managing director at LandColt Trading LLC. “Any myth
that banks aren’t lending money should quickly evaporate, as it’s obvious now
that people are able to obtain a loan, with or without the helpful backing of
the government’s tax credit.”
Monday’s report, released 30 minutes after the market’s
open, offered investors another reason to buy equities. The major U.S. stock
indexes jumped sharply to snap a three-session losing streak.
The Dow Jones Industrial Average gained 132.79 points, or
1.3 percent, to 10,450.95, its highest close for the year. The S&P 500
Index rose 14.86 points, or 1.4 percent, to 1,106.24. The Nasdaq Composite
Index climbed 29.97 points, or 1.4 percent, to 2,176.01.
The highlight of the economic data stream comes Tuesday,
when the government releases its revised third-quarter GDP report, which is
expected to show a downward revision from the 3.5 percent initial estimate.
Part of the downgrade will come from a lower revision in
personal consumption, but the lion’s share will come from negative impact of
the widening trade deficit, said TJ Marta, chief market strategist at Marta on
the Markets.
Anything within the range of 2.9 percent to 3.5 percent
would be acceptable, but “you don’t want it worse than 2.9 percent; that
could rock the boat,” added GAMCO Growth Fund’s Ward.
Other potential market movers could be a Tuesday report on
consumer confidence in November, and weekly jobless claims on Wednesday, with
the count of initial filers expected to come in around 500,000 for the latest
week.
“It would be nice if we could break below and start
that number with a 4,” commented Ward. “That could instill some
confidence that maybe the recovery has some legs.”
Via McClatchy-Tribune News Service.
