By Leah Schnurr
NEW YORK, Nov 29 (Reuters) - Dubai, jobs data, Black Friday results and a chance for Congress to throw fireballs at Fed chief Ben Bernanke: The U.S. stock market's path to glory is fraught with peril this week.
If Dubai's debt woes intensify and prompt a retreat from riskier assets, Friday's painful drop will carry through into next week.
Investors also will contend with any surprises from a Senate Banking Committee hearing on Federal Reserve Chairman Ben Bernanke's renomination to a second term. The hearing on Thursday could provide fireworks for Wall Street at a time when the central bank is facing scrutiny in Congress for its bailout of large financial institutions during the crisis.
In a busy week for data, this Friday's employment report for November will be the main event with job losses expected to decrease from October. But early data from retailers on sales during the Black Friday weekend -- generally the busiest shopping day of the year -- reveal a still wobbly consumer.
Both the job market and consumer spending remain among the weakest links in the economy and could potentially stymie the burgeoning recovery. Encouraging data on that front could fuel the rally that has pushed the Dow and S&P to 13-month highs.
Still, investors got a cold reminder last week that the recovery will be far from smooth, when Dubai asked to delay payment on billions of dollars of debt issued by conglomerate Dubai World and its main property subsidiary Nakheel.
On Sunday the United Arab Emirates offered banks emergency support and neighboring city-state Abu Dhabi promised to provide selective support to Dubai companies, but both moves were seen as the bare minimum by analysts. For details see
Dubai's surprise move last week jolted investors with its echoes of the collapse of the U.S. subprime mortgage market that sent reverberations through global financial markets. It was uncertain how much exposure U.S. banks have in Dubai, though fears of a wide impact had ebbed by Friday's close.
'A big part of whether the market's positive trend continues for the next month will partly depend on whether this Dubai World problem does, in fact, mushroom into concerns about the soundness of financial markets,' said Michael James, senior trader at Wedbush Morgan in Los Angeles.
'At least so far here in the U.S. market, that seems to be shrugged off, but we'll see if we get any more details ... that might put a more cautionary spin to the early problems.'
DECEMBER CHEER
After recovering more than 60 percent from March's 12-year low, the S&P 500 has churned sideways for most of November as investors look for fuel to keep the rally going.
December, traditionally one of the best months for stocks, has been good for an average gain of 1.7 percent in the S&P 500 since 1950, according to the Stock Trader's Almanac.
'If we're higher (this) week, it's very bullish for the remainder of the year,' said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, Ohio.
'We don't think there will be any major sell-off before the end of the year. There's still institutions that are trailing the market and they're going to use all those dips as buying opportunities.'
But the bears argue that this year's run-up leaves the market in an even more dangerous place than it was in March. Indeed, the fears of a possible debt default at Dubai World is the catalyst for an 'overdue correction' in equities and risk assets, the chief executive of top bond fund manager Pimco told Reuters on Friday.
BARGAIN HUNTING
American consumers shopped more for bargains at the start of the U.S. holiday season and spent significantly less than a year ago, according to closely-watched data released on Sunday.
Consumers said they will have spent nearly 8 percent less on average, or about $343 per person, over the weekend that includes U.S. Thanksgiving Day, Black Friday and runs through Sunday, according to the National Retail Federation.
Industry forecasts range from a rise of 2 percent to a decline of 3 percent for sales during the holiday period.
'There's still a lot of anxiety in the market about the consumer, and understandably so, because the unemployment rate is so high and there are obvious headwinds to consumer spending,' said John Praveen, chief investment strategist at Prudential International Investments Advisers LLC in Newark, New Jersey.
The release of same store sales figures for November on Thursday will provide the more definitive reading on the start holiday shopping season.
Friday's nonfarm payrolls report is expected to show the U.S. economy shed 130,000 jobs in November, easing from the 190,000 that were lost in October, according to a Reuters poll of economists. The U.S. unemployment rate is expected to remain the same at 10.2 percent.
Also expected this week are separate reports from the Institute for Supply Management on the manufacturing and services sectors. The ISM manufacturing index, due on Tuesday, is expected to dip to 55.0 in November from 55.7 in October, while the non-manufacturing, or services, index, due on Thursday, is expected to rise to 51.5 in November from 50.6 the month before.
Other data on tap includes pending home sales for October and car sales for November, both expected on Tuesday, followed by weekly initial jobless claims on Thursday and factory orders for October on Friday. See
Bernanke's renomination hearing on Thursday should be a lively one. Many lawmakers have directed their frustrations at the Fed, with senior senators of both political parties faulting the central bank's actions leading up to and during the crisis.
Even so, Senate Banking Committee Chairman Christopher Dodd said last month he sees no roadblocks to Bernanke's reconfirmation.
(The Wall St Week Ahead column appears every Sunday. Comments or questions on this one can be e-mailed to leah.schnurr(at)thomsonreuters.com)
(Additional reporting by Chris Sanders)
(Reporting by Leah Schnurr; Editing by Jan Paschal and Diane Craft)
((leah.schnurr@thomsonreuters.com; +1 646 223 6026;
Reuters Messaging: leah.schnurr.reuters.com@reuters.net ))
((Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com
* BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com)) Keywords: COLUMN STOCKS/OUTLOOK (For London stock market outlook please click on Pan-European stock market outlook Tokyo stock market outlook) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, Nov 29 (Reuters) - Dubai, jobs data, Black Friday results and a chance for Congress to throw fireballs at Fed chief Ben Bernanke: The U.S. stock market's path to glory is fraught with peril this week.
If Dubai's debt woes intensify and prompt a retreat from riskier assets, Friday's painful drop will carry through into next week.
Investors also will contend with any surprises from a Senate Banking Committee hearing on Federal Reserve Chairman Ben Bernanke's renomination to a second term. The hearing on Thursday could provide fireworks for Wall Street at a time when the central bank is facing scrutiny in Congress for its bailout of large financial institutions during the crisis.
In a busy week for data, this Friday's employment report for November will be the main event with job losses expected to decrease from October. But early data from retailers on sales during the Black Friday weekend -- generally the busiest shopping day of the year -- reveal a still wobbly consumer.
Both the job market and consumer spending remain among the weakest links in the economy and could potentially stymie the burgeoning recovery. Encouraging data on that front could fuel the rally that has pushed the Dow and S&P to 13-month highs.
Still, investors got a cold reminder last week that the recovery will be far from smooth, when Dubai asked to delay payment on billions of dollars of debt issued by conglomerate Dubai World and its main property subsidiary Nakheel.
On Sunday the United Arab Emirates offered banks emergency support and neighboring city-state Abu Dhabi promised to provide selective support to Dubai companies, but both moves were seen as the bare minimum by analysts. For details see
Dubai's surprise move last week jolted investors with its echoes of the collapse of the U.S. subprime mortgage market that sent reverberations through global financial markets. It was uncertain how much exposure U.S. banks have in Dubai, though fears of a wide impact had ebbed by Friday's close.
'A big part of whether the market's positive trend continues for the next month will partly depend on whether this Dubai World problem does, in fact, mushroom into concerns about the soundness of financial markets,' said Michael James, senior trader at Wedbush Morgan in Los Angeles.
'At least so far here in the U.S. market, that seems to be shrugged off, but we'll see if we get any more details ... that might put a more cautionary spin to the early problems.'
DECEMBER CHEER
After recovering more than 60 percent from March's 12-year low, the S&P 500 has churned sideways for most of November as investors look for fuel to keep the rally going.
December, traditionally one of the best months for stocks, has been good for an average gain of 1.7 percent in the S&P 500 since 1950, according to the Stock Trader's Almanac.
'If we're higher (this) week, it's very bullish for the remainder of the year,' said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, Ohio.
'We don't think there will be any major sell-off before the end of the year. There's still institutions that are trailing the market and they're going to use all those dips as buying opportunities.'
But the bears argue that this year's run-up leaves the market in an even more dangerous place than it was in March. Indeed, the fears of a possible debt default at Dubai World is the catalyst for an 'overdue correction' in equities and risk assets, the chief executive of top bond fund manager Pimco told Reuters on Friday.
BARGAIN HUNTING
American consumers shopped more for bargains at the start of the U.S. holiday season and spent significantly less than a year ago, according to closely-watched data released on Sunday.
Consumers said they will have spent nearly 8 percent less on average, or about $343 per person, over the weekend that includes U.S. Thanksgiving Day, Black Friday and runs through Sunday, according to the National Retail Federation.
Industry forecasts range from a rise of 2 percent to a decline of 3 percent for sales during the holiday period.
'There's still a lot of anxiety in the market about the consumer, and understandably so, because the unemployment rate is so high and there are obvious headwinds to consumer spending,' said John Praveen, chief investment strategist at Prudential International Investments Advisers LLC in Newark, New Jersey.
The release of same store sales figures for November on Thursday will provide the more definitive reading on the start holiday shopping season.
Friday's nonfarm payrolls report is expected to show the U.S. economy shed 130,000 jobs in November, easing from the 190,000 that were lost in October, according to a Reuters poll of economists. The U.S. unemployment rate is expected to remain the same at 10.2 percent.
Also expected this week are separate reports from the Institute for Supply Management on the manufacturing and services sectors. The ISM manufacturing index, due on Tuesday, is expected to dip to 55.0 in November from 55.7 in October, while the non-manufacturing, or services, index, due on Thursday, is expected to rise to 51.5 in November from 50.6 the month before.
Other data on tap includes pending home sales for October and car sales for November, both expected on Tuesday, followed by weekly initial jobless claims on Thursday and factory orders for October on Friday. See
Bernanke's renomination hearing on Thursday should be a lively one. Many lawmakers have directed their frustrations at the Fed, with senior senators of both political parties faulting the central bank's actions leading up to and during the crisis.
Even so, Senate Banking Committee Chairman Christopher Dodd said last month he sees no roadblocks to Bernanke's reconfirmation.
(The Wall St Week Ahead column appears every Sunday. Comments or questions on this one can be e-mailed to leah.schnurr(at)thomsonreuters.com)
(Additional reporting by Chris Sanders)
(Reporting by Leah Schnurr; Editing by Jan Paschal and Diane Craft)
((leah.schnurr@thomsonreuters.com; +1 646 223 6026;
Reuters Messaging: leah.schnurr.reuters.com@reuters.net ))
((Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com
* BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com)) Keywords: COLUMN STOCKS/OUTLOOK (For London stock market outlook please click on Pan-European stock market outlook Tokyo stock market outlook) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.