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Wall St.'s 70's show
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December 2, 2001: 7:00 a.m. ET
Dow, Nasdaq stand on brink of a dubious milestone not seen since 1974.
By Staff Writer Jake Ulick
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NEW YORK (CNN/Money) - The U.S. stock market faces a daunting task this month, when only a heroic gain can save the major indexes from the first back-to-back annual decline in 27 years.
Will 2001 end up like 1974? Maybe not, if December's stock market builds on its ten-week run. The Dow Jones industrial average, up 19.6 percent since Sept. 21, needs to rise 9.5 percent to erase its loss for the year.
Technology stocks face a tougher challenge. Up 35.6 percent from its latest low, the Nasdaq composite index requires an improbable 28 percent gain this month to go positive for 2001.
But if investors continue to look beyond weak economic news to a recovery, December could be another strong month for stocks.
"Every day there's some reason why people shouldn't own stocks and yet the market continues to climb that wall of worry," Michael Balog, managing director of equity trading at Bank of America Securities, told CNNfn's Halftime Report. "Going forward my guess is more of the same."
There's plenty to worry about. The nation's unemployment rate is expected to rise to a five-year high of 5.6 percent in November when the Labor Department releases monthly jobs data Friday. In addition, the economy probably lost 210,000 jobs, economists surveyed by Briefing.com predict, after shedding 415,000 jobs in October.
Before that, the National Association of Purchasing Management's index of manufacturing activity on Monday is expected to rise slightly, to
to 41.9 in November. But the under-50 reading will mark the sixteenth straight monthly contraction for the factory sector.
Faced with the slowdown, the government has been cutting taxes and interest rates. Congress, meanwhile, is expected to pass a multi-billion-dollar stimulus package. And while corporate profits are expected to fall again this quarter and next, analysts forecast a rebound by the spring of next year.
"Barring a surprise, come late spring, early summer, we may be feeling pretty good again," said Paul McManus, director of fundamental research at Independence Investment.
Last week's surprise was Enron (EBE: Research, Estimates) , whose shares tumbled as low as 25 cents, down from $80 earlier this year. Facing lawsuits, big debts and financial losses, the energy trader is teetering on the brink of bankruptcy.
Also last week, jobless claims rose, consumer confidence fell and the economy posted its worst performance in more then a decade during a period that barely reflected the impact of Sept. 11. But the market ended mixed
The Dow industrials fell 1 percent while the Nasdaq rose 1.4 percent over the last five trading sessions.
In other economic news ahead, October factory orders Thursday are expected to rebound from September's big drop of 6.2 percent. But October construction spending, due Monday, is seen declining again.
October personal income is forecast to gain 0.1 percent, according to the consensus estimate, while spending is seen gaining 1.9 percent. The figures are due Monday.
The week is a light one for earnings. Quarterly profits at Albertson's (ABS: Research, Estimates) , the supermarket chain, are expected to come in at 44 cents a share, according to the consensus of analysts surveyed by Briefing.com. That's little changed from 45 cents a share earned during the year-ago period.
But National Semiconductor (NSM: Research, Estimates) is expected to lose 31 cents a share, as chip demand slowed from the year-ago period when the company posted a profit.
One of the more unusual profit numbers comes from Mesa Air (MESA: Research, Estimates) . The regional airline is expected to post a profit of 2 cents a share during a period when most major airlines lost money because of the plunge in air travel.
Also this week, Federal Reserve Chairman Alan Greenspan will be speaking after the market's close Monday.
But Steven Wood, economist at Briefing.com, does not expect any revelations on the direction of interest rates, which the Fed has lowered 10 times this year.
"With the next FOMC meeting only another week away, it is unlikely any of them will tip their hands regarding monetary policy," Wood said.
The Fed holds its last scheduled meeting of the year Dec. 11.
Shares of Cisco Systems (CSCO: Research, Estimates) and Coca-Cola (KO: Research, Estimates) could be active. Both companies hold analyst meetings this week.
As for the stock market, even if 2001 brings the first back-to-back annual losses since 1974, next year could be better. Stocks snapped their two-year losing streak in 1975, the last time Donald Rumsfeld was Defense Secretary. 
Click here to send mail to Jake Ulick
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