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Will Wall St. keep rolling?
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October 28, 2001: 7:00 a.m. ET
Investors look to maintain momentum despite economic and corporate data.
By Staff Writer Alexandra Twin
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NEW YORK (CNNmoney) - You've got to admire Wall Street's resilience. Hundreds of companies have offered limp earnings. Economic data are hitting multiyear lows. And yet, stocks keep on rising.
While analysts and market watchers disagree as to how soon the bubble will burst, many do agree, for the most part, that at least for now equity indexes have hit upon some stubborn momentum.
"Investors have been ignoring earnings and looking forward, pretty much discounting the third quarter and looking to early 2002," said Brett Gallagher, head of U.S. equities at Julius Baer. "I don't see any major roadblocks on the horizon for now. We have staying power in the very short term."
Corporate quarterly results will take a backseat this week as investors look to a trio of economic reports for a go-ahead to sustain last week's momentum.
Key data include consumer confidence numbers on Tuesday, gross domestic product numbers on Wednesday, and the October unemployment numbers from the Labor Department on Friday.
U.S. markets ended in positive territory last week, turning in the fourth weekly gain in five weeks. Since bottoming Sept. 21, the Nasdaq has gained nearly 25 percent while the Dow industrials are up more than 15 percent from their September low.
The Nasdaq Composite index finished down 6.51 points on Friday at 1768.96, but gained 5.8 percent on the week.
The Standard & Poor's 500 closed up 4.52 on the day to 1104.61, and was up 2.9 percent on the week.
And the Dow Jones industrial average closed up 82.27 points Friday to end at 9,545.17, and also was up 3.7 percent on the week.
On Thursday, data showed that durable goods fell 8.5 percent in September while existing home sales slid 11.7 percent.
As the third quarter moves toward the finish line, many companies have released quarterly results that have met or edged lowered estimates, but the majority also have shown steep declines from the same quarter a year earlier. Yet investors seem determined to keep things rolling.
"To an extent we're in a vacuum where even poor economic statistics, such as the durable good orders, can't dissuade investors," Gallagher said.
Both the Nasdaq composite and the Standard & Poor's 500 index have hit their highest levels since the Sept. 11 attacks. The Dow has been the laggard, still falling 60 points short of the 9,605.51 reached Sept. 10.
The Dow may play the caboose a bit longer.
So-called defensive stock names - those that traditionally are seen as safe-haven plays during times of turmoil - have been some of the Dow's biggest problems of late, including SBC Communications (SBC: Research, Estimates), Disney (DIS: down $0.26 to $18.45, Research, Estimates), and Johnson & Johnson (JNJ: Research, Estimates), among others.
As the market has improved, investors have become more aggressive, Gallagher said, pulling money out of defensive issues and putting it into big, liquid, blue chip names as well as technology.
"Technology needs to be the leader on the way up, because it was the leader on the way down," Ned Riley, chief investment strategist at State Street Global Advisors, told CNNfn's Street Sweep. "Even though the earnings reports are miserable, there's a light at the end of the tunnel. That's what investors are looking at right now."
After the close of trade Friday, the U.S. Department of Defense awarded Lockheed Martin Corp. (LMT: Research, Estimates) a contract that could be worth up to $200 billion to build its new radar-evading Joint Strike Fighter. The No. 1 defense contractor beat out rival Boeing (BA: Research, Estimates).
GDP, unemployment data lead economic news
On Tuesday, the Conference Board will release its October index of consumer confidence. Economists expect the number to fall to 95.0 from a revised 97.6 in September.
On Wednesday, the U.S. Department of Commerce will release the third-quarter growth rate for gross domestic product (GDP) - the broadest measure of the nation's economy. Economists expect GDP to decline by 1.2 percent, compared with a revised growth of 0.3 percent in the second quarter. However, the number is preliminary and will be revised.
While some experts argue that the economy already is in a recession, many economists say the technical definition of a recession is two consecutive quarters of negative growth.
On Friday, the Labor Department will release October unemployment data. The unemployment rate is expected to rise to 5.2 percent from 4.9 percent in September, according to a consensus of economists surveyed by Briefing.com.
Employers are expected to have cut 275,000 jobs outside the farm sector, compared with a loss of 199,000 in September, which was a 10-year high. The September figure represents the highest number of job cuts since 259,000 in February 1991, when the United States was engaged in the Gulf War and the economy was in recession.
Although some research for the September jobs report took place after Sept. 11, Friday's information will offer a far more telling assessment of the impact of the terrorist attacks that led companies to cut thousands of jobs, economists said.
"I think we are heading into the worst of it. Investors think there we're heading towards a recovery in the next six months and I hope that they are right, but I just don't see the valuations for a huge rally going forward," Maureen Allyn, chief economist at Zurich Scudder Investments, told CNNfn.
P&G, airlines due to report
Although the third quarter is winding down, a number of companies still are due to report results this week, including Dow component Procter & Gamble and a number of airlines.
While there is little significant corporate news expected Monday, Tuesday brings fiscal first-quarter results from Procter & Gamble (PG: Research, Estimates), due out before the opening bell. The consumer products maker - known for Tide detergent and Pampers diapers - is expected to earn 93 cents a share versus the 88 cents earned a year earlier, according to a consensus of analysts surveyed by tracking firm First Call.
Also before the bell Tuesday, Kellogg (K: Research, Estimates), the food processor best known for breakfast cereals such as Rice Krispies and Frosted Flakes, is expected to report earnings of 35 cents a share, down from the 45 cents earned a year earlier.
On Wednesday, broadband cable networking company Comcast (CMCSK: Research, Estimates) is expected to report a loss of 19 cents a share, versus a loss of 22 cents a share in the year-ago quarter.
Air carrier Continental Airlines (CAL: Research, Estimates) is expected to release its quarterly earnings. The company is expected to post a per share loss of $1.42 compared with earnings of $2.24 a year ago.
Fellow carrier UAL Corp. (UAL: Research, Estimates) will release its results before the open Thursday. The company is expected to have lost $9.17 a share, up from a loss of $1.29 a year ago. Delta Air Lines (DAL: Research, Estimates) also is expected to report results Thursday. The company is forecast to have lost $1.93. A year ago it earned $2.08.
After the close of trade Thursday, online discount travel retailer Priceline.com (PCLN: Research, Estimates) is due to report results. Analysts expect the company to have earned 2 cents a share, an improvement from the penny the company lost in the same period a year earlier.
No meaningful corporate results are expected Friday. 
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