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Rash of data likely to be more bad news
Wall Street ends a dreadful october with little hope of comfort from the fed
- Reuters
- Published: 23:33 October 25, 2008
New York : Whichever way this week plays out on Wall Street, the market is likely to close out an October that stock investors would rather forget.
So far this month, the Dow is off 22.8 per cent, the S&P 500 is off 24.7 per cent and the Nasdaq is down 25.8 per cent - putting them on track for their worst month since the October 1987 crash. In the S&P's case, this October could wind up being its worst month ever since the Second World War.
Bears are expected to tighten their grip on Wall Street unless there are reassurances by the Federal Reserve and other central banks that authorities have what it takes to reduce the blows from the economic downturn.
But there's likely to be little comfort until the Fed issues its verdict on the economic outlook and the government releases its advance report on third-quarter gross domestic product (GDP), due on Thursday.
The GDP data could well be the first negative print for this closely watched gauge of the US economy's health since the revised reading for the fourth quarter of 2007.
"The outlook for the market really depends upon what type of action the Fed may take," said Doug Roberts, chief investment strategist for Channel Capital Research in Shrewsbury, New Jersey. "I wouldn't rule out the possibility of something on a coordinated basis globally as well."
In addition to the Fed, this week will be jampacked with numbers - economic indicators including new home sales, consumer sentiment, a survey on home prices, plus durable goods orders and data on personal incomes and spending - as well as a deluge of earnings that could confirm investors' worst fears that the outlook for profits and economic growth is becoming grimmer.
Investors will study the data and earnings to get a sense of how deep a recession the US may face as real estate values keep sliding, stocks continue falling and consumers keep pulling their purse strings even tighter. The Federal Open Market Committee is scheduled to begin a two-day meeting on Tuesday to decide on interest rates.
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