Wall Street: The rally test - 期貨

Wall Street: The rally test

The big question -- can stocks build on last week's rally, which marked the
best week in months?

By Alexandra Twin, CNNMoney.com senior writer
March 14, 2009: 3:25 PM ET

NEW YORK (CNNMoney.com) -- Investors return to work on the back of Wall
Street's best week in months - and that's both a good and bad thing.

"I think it's going to take a lot more time for the economy to work through
all the issues, but the valuations on certain companies are appealing," said
Gary Flam, portfolio manager at Bel Air Investment Advisors.

He said that the current cycle could follow the path of the economic era it
is most often compared to: the 1930s. He said that during that period, the
stock market bottomed in 1932, but the Great Depression stretched on for
several more years.

The week ahead brings reports on manufacturing, housing, consumer and
wholesale prices and the next Federal Reserve policy meeting. The economic
news is set to show what investors already know - that the economy remains in
recession. But what's more important is how investors react to the news.

The Dow and S&P 500 ricocheted off 12-year lows to spike more than 10% in
just four sessions, while the Nasdaq bounced off six-year lows to jump almost
13%. That short sharp advance has left investors both hopeful that the market
could be closer to stabilizing - and wary that the gains were just an
illusion.

Eye on banks: In the short run, the financial sector and the U.S. government
remain the drivers of the market.

Last week, Citigroup (C, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and
Bank of America (BAC, Fortune 500) all said that they were profitable in the
first two months of the year. But the quarter isn't over and investors will
be looking to see that the earnings actually reported next month back up
those claims.

Ahead of that, investors will continue to look to the government for
guidance. Talk about reinstating the "uptick rule" that limits short selling
and changing mark-to-market accounting fed the advance last week and anything
related could help stocks sustain the advance this week.

"The investor class is looking at the Congress, the president and the
regulatory system to show them they can have confidence," said Mike
Stanfield, CEO of VSR Financial Services.

"People understand that being in the market means taking a risk, but they
don't want to be part of a system that they think is rigged," he said. "They
want to know that someone is looking out for them."

On the docket
Monday: February industrial production and factory output are on track to
continue to decline as the recession wears on.

Production is expected to have fallen by a seasonally adjusted 1.2% in
February after falling by 1.8% in January, according to a consensus of
economists surveyed by Briefing.com. Capacity utilization, a measure of
factory output, is expected to drop to a seasonally adjusted 71.1% from 72%
in January.

The NY Empire State index, a key regional manufacturing report, is expected
to have improved marginally after hitting a record low last month. The index
is expected to have improved to a reading of negative 32 in March from
negative 34.7 in February.

Also due: The National Association of Home Builders report on homebuilders'
confidence in the current market and the outlook six months from now.

Tuesday: Reports on housing and wholesale inflation are due in the morning.

Housing starts are expected to have fallen to a 453,000 annual unit rate in
February from a 466,000 unit annual rate in January. Building permits are
expected to have fallen to a 510,000 annual rate from a 531,000 annual unit
rate in January.

The Producer Price Index (PPI), a measure of wholesale inflation, likely rose
0.4% in February after rising 0.8% in the previous month. The so-called Core
PPI, which strips out volatile food and energy prices, rose 0.1% after rising
0.4% in the previous month.

Wednesday: The Consumer Price index (CPI), a read on consumer inflation, is
due in the morning. CPI is expected to have risen 0.3% in February after
rising 0.3% in January. The Core CPI is expected to have risen 0.1% after
rising 0.2% in January.

The latest interest-rate decision from the Federal Reserve is due Wednesday
afternoon at the conclusion of the two-day policy meeting. The Fed is
expected to hold rates steady near zero and to say that it is ready to take
additional steps to help mend the U.S. economy and credit markets.

Thursday: The Philadelphia Fed index, another regional reading on
manufacturing, is expected to have improved modestly to 40.0 in March from
41.3 in February.

The index of leading economic indicators is expected to have fallen 0.6% in
February after falling 0.4% in January.

The weekly jobless claims report is also on tap.

Friday: Fed Chairman Ben Bernanke speaks in Phoenix on the financial crisis
and community banking.


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http://money.cnn.com/2009/03/14/markets/markets_weekahead/index.htm

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