The Federal Reserve may have thrown Wall Street a bone Friday by lowering the rate it charges banks, but if this week’s housing market data and corporate headlines portend more gloom, it may have to toss another.
So far, Wall Street, beset by fears that credit problems in mortgage and corporate lending will cripple the economy, has been stubbornly signaling to the central bank that it wants a bailout — ideally, by way of a cut in the benchmark fed funds rate.
With the Fed’s next meeting not scheduled until Sept. 18, investors may stay jittery over the coming weeks as they watch the central bank to see if it will lower rates before that point.
Stocks got a boost Friday, thanks to the cut in Fed’s discount rate, but few market participants are breathing a sigh of relief yet. Many on Wall Street are still in panic mode; even when the Fed started injecting large amounts of cash into the banking system through repurchase agreements two weeks ago, the Dow Jones industrial average continued on its steep downward slope, sliding 812 points over six trading days.
Last week, the Dow finished down 1.21 percent; the Standard & Poor’s 500 index ended down 0.53 percent; and the Nasdaq composite index ended down 1.57 percent.
This week is light on economic data, so it’s improbable that the market will garner any lasting direction from upcoming government reports. One piece of data that will be widely watched, though, is the Commerce Department’s report Friday on new home sales and prices. Economists surveyed last Friday by Thomson Financial predicted, on average, that sales of new single-family homes will fall in July to a seasonally-adjusted annual rate of 825,000 units, down from 835,000 in June.
Most likely, Wall Street will keep an eye out for any indications from the Fed that it might take more steps to prevent the stock market from falling further, and any news from lenders or hedge funds about the state of the credit environment.
A slim schedule for economic data
The Conference Board on Monday will report on leading economic indicators. The index is expected to rise 0.3 percent for July, compared to June’s 0.3 percent decline.
Also Monday, the Chicago Federal Reserve releases its July index on national business activity.
On Thursday, the Commerce Department releases its monthly measure of durable goods orders. Durable goods orders are anticipated to have risen 1.0 percent in July, a slightly smaller jump than the increase in June.
Few important earnings
This week won’t bring a huge number of quarterly financial results, but there are a few that investors will be watching for insight into consumer spending and the housing market.
On Tuesday, Target Corp. is expected to report a second-quarter profit of 80 cents a share. The discount retailer closed at $61.18 Friday, in the upper half of its 52-week range of $46.35 to $70.75.
Also Tuesday, BJ’s Wholesale Club Inc. is anticipated to post earnings of 41 cents per share. The discount warehouse chain closed at $29.43 Friday, in the lower portion of its 52-week range of $25.18 to $39.15.
Toll Brothers Inc. releases quarterly results Wednesday, and is expected to report a fiscal third-quarter profit of 6 cents a share. The homebuilder closed at $22.63 Friday, in the lower half of its 52-week range of $18.85 to $35.64.
On Friday, Burger King Holdings Inc. is expected to post a fiscal fourth-quarter profit of 27 cents a share. The fast food chain closed at $23.67 Friday, in the upper half of its 52-week range of $12.99 to $27.04.