Wall Street braces for last week of terrible month

New York: Wall Street faces stiff headwinds in the week ahead, the fate of Citigroup largest among them, that stand in the way of building on Friday's big rally and preventing Nov-ember from winding up as one of the worst months for stocks on record.

The holiday-shortened week begins with President-elect Barack Obama introducing his economic team, including expectations he will formally nominate Timothy Geithner, president of the New York Federal Reserve Bank, as his secretary of the Treasury. It will end with the first key indication on how much consumers will spend this holiday season.

Investors will be looking to Obama and Geithner for signals on what they'll do to stem the economic crisis.

In the past week alone, markets erased more than a decade of gains as banks, led by Citigroup, touched new lows and worries mounted about the likelihood of a bailout for automakers. Stocks also reeled from a slew of negative data that put US new jobless claims at a 16-year high.

"The market is still going to remain concerned regarding the state of the financials and the huge meltdown in the banks," said Fred Dickson, market strategist of D.A. Davidson & Co in Lake Oswego, Oregon.

Key economic indicators on tap for next week include existing-home sales for October, consumer sentiment and confidence, and weekly US jobless claims data.

Historic November

But market-watchers will hone in on Citigroup over the weekend for any developments as to the future of the bank, the second-largest in the US by assets.

Citigroup's shares shed 20 per cent on Friday to close at $3.77 (Dh13.85), for a loss of around 60 per cent for the week. In after-hours trade on Friday Citi shares rose 6.6 per cent.

For the week, the Dow lost 5.3 per cent, the S&P 500 fell 8.4 per cent, and the Nasdaq lost 8.8 per cent, even after all three indexes surged more than 5 per cent on Friday.

The dismal week capped off a historic November that is quickly becoming one of the worst months for US stocks since October 1987.

Through Friday, the S&P is down more than 17 per cent for the month of November, the Dow is off nearly 14 per cent, and Nasdaq is nearly 20 per cent lower.

Light volume owing to the Thanksgiving holiday on Thursday and a half day on Friday will almost certainly exacerbate volatility, as retailers take the spotlight in the latter half of the week. Wall Street will look to Black Friday, the day after Thanksgiving, which kicks off the holiday shopping season and is traditionally the biggest shopping day of the year, for a gauge of consumer spending.

But outlooks from major retailers suggest this could be one of the worst holiday shopping seasons in years.

"It's going to give new definition to the word 'black'," Dickson said. "There's a lot of attention to the retail side of next week." Investors will also take some cues from the outlooks of homebuilder D.R. Horton Inc, equipment maker Deere and Co, apparel retailer Talbots Inc and luxury jewellery retailer Tiffany and Co.