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Wall Street decks the halls
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December 16, 2001: 7:00 a.m. ET
If the headlines aren't terrible, markets could see modest upturn.
By Staff Writer Meghan Collins
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NEW YORK (CNN/Money) - After being battered by several days of bad economic data, a weary Wall Street slogs into the week before Christmas hoping for a modest Santa Claus rally amid a light schedule of economic news and a handful of prominent earnings reports.
"Next week promises to be a very slow week as people begin to anticipate the Christmas holiday," said John Manley, a Salomon Smith Barney investment strategist. "The key will be the lack of any bad earnings news. The market probably tends to trend higher."
The markets are coming off one of their most disappointing weeks since the sell-off related to the Sept. 11 terrorist attacks. Dismal November retail sales, news of more steep job cuts and a spate of profit warnings kept investors downbeat most of the week, though the market ended up modestly on Friday.
For the week, the Dow Jones industrial average lost 238.31 points, or 2.4 percent, to close at 9811.15, while the Nasdaq composite dipped 68.09 points, or 3.4 percent, to close at 1953.17. The Standard & Poor's 500 dropped 3 percent - this in a week when the Fed cut interest rates for an unprecedented 11th time in an effort to pull the country out of a recession.
Market analysts are divided on how the Dow and Nasdaq will move through the end of the year.
"(Investors) need a clear sign in the economy that things have bottomed out and need corporate leaders in key industries to come out and say things have bottomed out," Warren Meyers of Walter J. Dowd told CNNfn.
Even with last week's sell off and the economy weaker than anticipated, the Dow is up 19 percent and the Nasdaq 37 percent since hitting lows on Sept. 21. Also, some say cost cutting could soon have a positive effect on corporate earnings.
"We sense that the sell-off is behind us and the market has the preconditions in place for a pretty good year-end rally," AG Edwards chief strategist Al Goldman said on CNNfn's Street Sweep. "It's not going to be fabulous because we've already done an awful lot since Sept. 11."
"Going forward you're not going to see anything too dramatic, barring any major news event," said John Hughes, a market analysts with Shield & Company.
A "major news event" out of Afghanistan or the Middle East, of course, remains a strong possibility. The "Osama factor" could make trading volatile.
"The market will take its cues from political events, Afghanistan events," said David Katz, chief investment officer for Matrix Asset Advisors, but "stocks should start to trade higher."
Check here for CNN/Money's economic calendar.
On Tuesday investors will get a read on housing starts released from the federal government. Economists surveyed by Briefing.com forecast a drop to an annual rate of 1.53 million in November from 1.55 million, but say that housing starts will still surpass last year's pace.
On Wednesday, the Commerce Department is expected to report that the nation's trade deficit widened to $27.5 billion in October from $18.7 billion in September. That month's results, however, were distorted by insurance payments and other extraordinary items in the wake of the World Trade Center attacks.
Economists anticipate the index of leading indicators to have risen 0.2 percent in November on top of a 0.3 percent gain in October. The report will be released Wednesday by a private research group.
Personal spending numbers for November will be released Friday. Analysts expect the indicator to have dipped 0.5 percent, citing a drop in auto sales from October's record levels.
Also Friday, the government will give the final word on third quarter GDP. Economists surveyed by Briefing.com anticipate a drop of 1.1 percent - the same figure as reported in October.
Earnings reports due this week include big names in the financial and retail sectors.
Wednesday morning, Morgan Stanley (MWD: down $1.43 to $52.55, Research, Estimates) is scheduled to report earnings of 66 cents per share, up 1 cent from last quarter and down 40 cents from this time last year, according to analysts surveyed by earnings tracker First Call.
Before the bell Thursday, Lehman Brothers (LEH: down $1.60 to $64.26, Research, Estimates) is expected to post a significant drop of 41 cents per share from last quarter, down to 73 cents per share from $1.46 a year ago.
Also, Goldman Sachs (GS: down $1.34 to $89.66, Research, Estimates) is expected to report a gain of 3 cents per share, up to 90 cents, but down from $1.50 last year.
Analysts expect Bear Stearns (BSC: down $0.86 to $56.63, Research, Estimates) to announce a loss of 5 cents per share to 90 cents from 95 cents last quarter, according to First Call. The company reported a share price of $1.36 for the same period last year.
In the retail sector, FedEx (FDX: up $1.22 to $48.05, Research, Estimates) is expected to announce a gain of 23 cents per share, up to 64 cents from 41 cents per share last quarter, according to First Call. The company earned 67 cents per share for the same quarter last year. 
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