Housing, dollar and oil on stocks' radar
NEW YORK (Reuters) - New data on a depressed housing sector figures large in a fairly heavy schedule of economic reports due next week while the dollar and oil approach threshold levels that could prove unsettling.
"Investors are anxious to see any kind of bullish news because we sure haven't seen much lately," said Fred Dickson, market strategist and director of retail research at D.A. Davidson & Co. in Lake Oswego, Oregon.
Key concerns include whether the dollar falls through $1.50 against the euro and sets a new low, and whether oil hits $100 per barrel or higher, Dickson said. On Friday, U.S. crude oil for January delivery CLF8 settled at a record $98.18 a barrel, up almost 1 percent on the New York Mercantile Exchange.
Credit card groups will have reports on spending at the start of the Christmas shopping season for an early tip-off as to how the consumer is bearing up, Dickson noted.
Ed Maraccini, portfolio manager with Johnson Asset Management in Racine, Wisconsin, said he will be watching data on sales of existing homes and new homes due on Wednesday and Thursday, respectively, as well as the September S&P/Case-Shiller Home Price Indices due on Tuesday.
THREAT TO CONSUMER PSYCHE
Maraccini expects to see more evidence of falling home prices.
"I'm worried that it's going to affect the psyche of the consumer," Maraccini said. "Housing feeds into net worth, net worth feeds into consumer spending and spending drives the economy. There is a high correlation between the three."
Existing home sales, due on Wednesday, are expected to slow to a seasonally adjusted annual rate of 5.00 million units in October from 5.04 million in September, according to economists polled by Reuters. They forecast that new home sales, due on Thursday, also would decline -- to an annual rate of 750,000 units in October from 770,000 in September.
The Conference Board's survey on consumer confidence for November will be released on Tuesday. The index, which has been declining since August, is expected to fall further to 91.6 in November from 95.6 in October, according to a Reuters poll of economists.
Despite the heavy calendar of economic releases and a small number of quarterly earnings reports, many analysts are saying concerns about the credit markets are paramount.
"The market's going to have its ear cocked for news about financial stress," said Michael Metz, chief investment strategist at Oppenheimer & Co in New York. "The market is not really dependent on economic or earnings news."
D.A. Davidson's Dickson notes that the stock market has been closely tracking the pricing of mortgage debt obligations since July.
For the past week, the Dow Jones industrial average .DJI fell 1.5 percent, the Standard & Poor's 500 Index .SPX slipped 1.2 percent and the Nasdaq Composite Index .IXIC dropped 1.5 percent.
For the year so far, though, the three major U.S. stock indexes remain in positive territory. The blue-chip Dow average is up 4.2 percent, while the S&P 500 is up 1.6 percent and the Nasdaq is up 7.5 percent for the year. Continued...
