NEW YORK — Investors this week will lean on a stream of earnings and economic reports to help determine how prolonged and painful the U.S. economic downturn might be.
There has been fresh evidence the credit market has begun to thaw. But that alone might not be enough to restore confidence in the stock market. Wall Street ended a volatile two-week run fairly stable Friday, and there were indications that bank-to-bank lending rates eased and that some companies returned to the bond market to raise cash.
Those indicators might have previously been enough to reassure anxious investors that the worst is over for the stock market. But analysts still remain cautious.
“If you can survive the whiplash of this bottom formation, then stocks look ridiculously cheap,” said Edward Yardeni, president and market analyst at Yardeni Research. “But, there are bigger questions. Investors still want to see the light of day in this credit crisis, and they want to know if the current recession will be relatively short and shallow.”
Sunday evening, stock index futures signaled a slightly higher open. Dow Jones industrial average futures rose 54, or 0.61 percent, to 8,825. Standard & Poor’s 500 futures rose 7.30, or 0.78 percent, to 940.50; while Nasdaq-100 futures rose 7, or 0.53 percent, to 1,318.
Sunday marked the anniversary of the 1987 stock market crash known as Black Monday. The Dow plunged 22.6 percent that day to mark the largest one-session percentage decline ever.
The blue chip index that tracks 30 of America’s biggest companies will begin trading today at the 8,852.22 level, down a stunning 37.5 percent from its record closing high of 14,164.53 set Oct. 9, 2007.
Jack Ablin, chief investment officer at Harris Private Bank, said the biggest signs that a bottom has formed will be how investors react to bad news this week. He is also interested in what chief executives have to say about their companies going forward.
The consensus among many analysts is that companies will begin to curtail their projections for the fourth quarter because of deteriorating growth. There have been a number of reports already out from companies such as Google Inc. and Honeywell International Inc. that overall have not been as bad as feared.
This week, a larger breadth of America’s business community are set to release results. Among them are Dow components’ AT&T Inc., Caterpillar Inc., 3M Co., Boeing Co., Microsoft Corp. and McDonald’s Corp. Others include Inc., UPS Inc. and Altria Group Inc.
Economic reports this week include September’s index of leading U.S. economic indicators today. Other big reports include the weekly U.S. jobless claims Thursday and the report on existing home sales Friday.
Investors might also get a better idea about what Federal Reserve Chairman Ben Bernanke thinks about the credit and stock markets. He is scheduled to testify at a house Budget Committee hearing about the economy and financial markets.
