Wall Street: A 'huge' week ahead

chart_ws_index_sp500_2.top.pngStocks struggle to break out of a summer slump By Blake Ellis, staff reporter


NEW YORK (CNNMoney.com) -- It may be the end of August, but the summer doldrums aren't over yet.

With all signs pointing to sluggish economic growth, a weak housing market and a lagging recovery, investors should buckle their seat belts for another rocky ride next week.

After jumping 7% in July, stocks are down more than 3% so far this month, and the major indexes edged lower again last week. Since the end of May, the Nasdaq has lost 4.6%, the S&P 500 is down 2.3% and the Dow is barely changed, ticking up 0.1%.

Why the slump? As excitement about strong corporate earnings fades, investors are turning their attention to the economy. And they aren't liking what they're seeing.

"Now that earnings have tapered off, all we're getting is bad news, bad news and more bad news," said Rob Russell, president of financial planning firm Russell & Company. "We don't seem to be headed in a good direction."

Last week, a fresh batch of lousy economic data sent stocks into the red as investors ran for the exits during three out of five days last week.

Following two disappointing reports showing dramatic plunges in home sales earlier in the week, the government said Friday that gross domestic product, the broadest measure of economic activity, was revised sharply lower in the second quarter.

But investors have been so far down in the dumps, it may not take much to lift their spirits. Because the GDP reading came in slightly better than expected, stocks managed to end the session on a positive note, rallying more than 1% on the news.

"At this point, investors are looking for any little bit of a positive sign they can get in the wake of all this poor economic data," said Russell. "It seems that 'less bad' is the new 'good.' "

Given the ongoing uncertainty about the economy's health, trading is likely to remain choppy for the next several weeks, even as summer ends and investors return to their desks.

But for now, the government's closely watched jobs report, along with a reading on consumer confidence and more manufacturing data due next week, will all give investors an idea of what's to come this fall, and either add fuel to the fire or calm some fears about an economic slowdown.

"Next week is going to be huge," said Peter Boockvar, chief market strategist at Miller Taback & Co. "We've been in a real summer slump and are at the mercy of these daily economic data points to see whether it looks like post-Labor Day we'll actually be able to start coming out of this economic malaise."

On the docket

Monday: A government report on personal income and spending is due before the opening bell. Economists surveyed by Briefing.com expect income to have edged up 0.2% in July after staying flat in June. Spending is forecast to rise 0.3% after ticking up 0.1%.

Tuesday: The Conference Board releases its Consumer Confidence index for August after the start of trading. Economists forecast the index to have edged down to 50 in August from 50.4 in July.

The Chicago PMI, a regional reading on manufacturing activity, is expected to have fallen to 57.5 in August from 62.3 in July.

The Case-Shiller 20-city home price index is expected to have risen 3.5% in June after rising 4.6% in May.

Wednesday: Before the market opens, payroll processing firm ADP is expected to report that private sector employers added 13,000 jobs in August after adding 42,000 in July.

Separately, outplacement firm Challenger, Gray and Christmas will report on planned job cuts.

After the start of trading, the Institute for Supply Management's (ISM) index of manufacturing is due. Economists forecast the index to have eased to 53 in August from 55.5 in July. Any number above 50 indicates growth in the sector.

Meanwhile, the government is expected to report that construction spending fell 0.7% in July, after slipping 0.1% in June.

Auto and truck sales are due throughout the day, and the government's weekly oil inventory report also is released Wednesday.

Thursday: The Department of Labor releases a weekly report on jobless claims before the bell. The number of Americans filing new claims for unemployment insurance is expected to have edged up slightly last week to 475,000 from 473,000 in the previous week. Continuing claims, a measure of Americans who have been receiving benefits for a week or more, are expected to have dropped to 4,435,000 from 4,456,000.

Meanwhile, the government is expected to report that pending home sales were unchanged in July after dropping 2.6% in June.

Factory orders are due from the Commerce Department in the morning. Economists forecast orders to have risen 0.3% in July after falling 1.2% in June.

The Commerce Department will issue a report on second-quarter business productivity, which is expected to be downwardly revised to a decline of 1.6% from the 0.9% drop that was initially projected.

Friday: The week ends with the government's widely anticipated monthly jobs report, which is forecast to show the U.S. economy lost 118,000 jobs in August after cutting payrolls by 131,000 in July. The unemployment rate is expected to tick up to 9.6% from 9.5%.

"Job creation is on everybody's mind," said Boockvar. "We know from all the earnings reports that businesses could hire boatloads of people tomorrow if they wanted to, but they're not doing it because there's so much uncertainty right now."

Separately, the ISM services index is expected to have slipped to 53.2 in August from 54.3 in July. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.98%3.93%
15 yr fixed3.04%3.04%
5/1 ARM3.30%3.69%
30 yr refi4.05%3.99%
15 yr refi3.11%3.10%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 16,764.64 86.74 0.52%
Nasdaq 4,470.32 17.53 0.39%
S&P 500 1,960.24 9.42 0.48%
Treasuries 2.27 -0.01 -0.40%
Data as of 12:22pm ET
Company Price Change % Change
Microsoft Corp 45.74 0.71 1.59%
Ford Motor Co 13.78 -0.62 -4.27%
Apple Inc 104.97 0.14 0.13%
Bank of America Corp... 16.63 0.03 0.18%
Yahoo! Inc 43.20 0.60 1.41%
Data as of 12:08pm ET

Sections

Honda CEO, Chairman and 11 other executives take pay cuts after company hit by recall failures. More

Regulators are about to reveal the results of an extensive health check of Europe's top 130 banks, indicating which may need a cash infusion. More

Many AT&T U-Verse customers across the country woke up to an emergency alert on their TVs. More

Using technology developed for the military and implemented in Iraq, schools have installed alarm systems that detect gunfire. More

Big purchases often come with big expectations. So it's no wonder that in a recent survey 80% of homebuyers said they regretted at least one thing about their home. Here are ways to improve those odds. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.