NEW YORK - It was another seesaw week on Wall Street, but it ended with a jolt of good news: a $6-a-barrel tumble in oil. This week, investors will watch to see if crude extends its drop or bounces back up again.
Stocks have been moving largely in an opposite lockstep with oil for the past few months. Financial sector developments, of course, can thwart the pattern — investors react to practically any report involving such names as Fannie Mae, Freddie Mac or Lehman Brothers Holdings — but Wall Street has made it clear that it likes when oil prices fall.
Wall Street has been upbeat about the pullback in energy prices because it hopes lower fuel costs will take some pressure off consumers. This week, economists surveyed by Thomson Financial/IFR expect the Commerce Department to report that personal spending rose by 0.2 percent but that personal income slipped by 0.1 percent. They also predict that month-over-month inflation at the personal-spending level will edge up 0.3 percent. Analysts are split, though, over oil’s next move. Crude ended the week with a big drop, but is still a few dollars above its recent lows.
Meanwhile, the financial sector has been on quite the turbulent ride. Given the mixed bag of economic readings that Wall Street is anticipating, the market’s volatility is not likely to go away this week. Last week, the Dow Jones industrial average finished down 0.27 percent, the Standard & Poor’s 500 index ended 0.47 percent lower, and the Nasdaq composite index fell 1.54 percent. The Dow again had several triple-digit moves.
Today, the National Association of Realtors reports on existing-home sales for July, and on Tuesday, Standard & Poor’s/Case-Shiller releases its June home price index and the Commerce Department posts its new-home sales data for July. Economists expect existing-home sales to have risen last month, but new-home sales to have dipped.
On Tuesday, the Federal Reserve releases minutes from its last meeting, where it kept the key interest rate steady at 2 percent.
On Wednesday, the Commerce Department reports on durable goods orders, which are expected to have risen by 0.1 percent in July.
On Thursday, the department releases its preliminary reading on second-quarter gross domestic product. After the disappointing estimate of 1.9 percent last month, the market is anticipating the figure to be revised up to 2.7 percent. Also Thursday, the Labor Department releases its weekly data on unemployment benefit claims — a reading that is being increasingly scrutinized as Wall Street tries to gauge how sharply the job market is deteriorating.
On Friday, the University of Michigan issues its final report on August consumer sentiment. Investors are forecasting a modest uptick, as U.S. gasoline prices have retreated from July highs.