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NEW YORK (CNN/Money) -
Bulls returning from the long holiday weekend should best be prepared to hit the ground running.
Although light on news, the week ahead may be heavier on intrigue, as investors delve into September, traditionally the worst month on Wall Street, and continue to assess the economic impact of one of the worst hurricanes on record.
There have been some positives this summer: second-quarter earnings picked up the pace and for a while, stocks did too. But July's surprisingly strong showing was countered by a tough August that brought record oil prices and the devastation of Hurricane Katrina.
"The question now is what impact the hurricane has on the economy and for how long," said Stephen Stanley, chief economist at RBS Greenwich Capital.
"The economic news coming out in the next week or two is not going to tell us that -- It's going to be vague for a while," he added. "So the focus for stocks will be the state of oil production in the gulf and the price of gas."
Oil prices retreated Friday, amid news that the U.S. and 26 other nations will open up emergency reserves to relieve some of the pressure created by damage to the Gulf Coast from the hurricane.
Yet, gas prices hit a fresh national record of close to $3 a gallon Friday and could even hit $4 a gallon in the coming weeks, experts say.
"Gas prices are going to keep rising and that's going to have a negative impact on consumer spending and consumer sentiment," said Ben Halliburton, chief investment officer at Tradition Capital Management.
For more on how higher fuel costs impact corporate earnings and the consumer, click here.
Stocks show resilience
Despite all the challenges of last week -- stocks managed to close higher, with investors seeming to take in stride each new development.
That may have been because investors see the slowing economy, rising oil prices and fallout from the hurricane as evidence that the Federal Reserve can slow its interest-rate hiking campaign. This belief could continue to protect stocks from steeper losses in the short-term, analysts say.
"The stock market is hoping that the Katrina effect will cause the Fed to stop its campaign, or at least pause, until it becomes clear just how big the impact of Katrina is on the economy," Halliburton said.
The market may have also be able to gain support from the belief that after a month of selling, stocks may be a little undervalued relative to future earnings projections, Halliburton said.
Economists and others remain unclear about what the impact of Katrina will be on the economy longer term.
Historically, natural disasters like this have been devastating in terms of loss of life, and have hurt the local economy, but have not had a long-term impact on the stock market, said Jeffrey Hirsch, editor in chief of the Stock Trader's Almanac.
"I think the hurricane really just exacerbates an existing situation for the market," Hirsch said.
Key events in the week ahead
- All financial markets are closed Monday for Labor Day.
- The Institute for Supply Management releases its services index for August Tuesday. The index is expected to have risen to 61.3 from 60.5 in July, according to a consensus of economists surveyed by Briefing.com.
- The Federal reserve releases its Beige Book Wednesday. The survey of the central bank's 12 districts is used in making the decision about short-term interest rates.
- The July wholesale inventories report, due Thursday, is expected to show a rise of 0.7 percent, just as it did in June, according to forecasts.
- National Semiconductor (Research) is expected to report quarterly earnings Thursday during the trading session. The chipmaker is expected to have earned 21 cents per share, down from 31 cents a year ago.
- Both Intel (Research) and Texas Instruments (Research) give their mid-quarter updates after the bell Thursday. What the two chipmakers have to say about tech spending will be seen as indicative of the broader tech sector.
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