By Victor Reklaitis, MarketWatch
NEW YORK (MarketWatch) -- After Friday's stock-market rally,
investors will focus next week on retail-sales data and the
implications of the strong November jobs report for Federal Reserve
policy.
Trading may be muted on Monday following the nearly
200-point-gain notched by the Dow Jones Industrial Average (DJI) on
Friday, according to Joe Heider, regional managing principal at
wealth-management firm Rehmann. Government data showed Friday that
nonfarm payrolls rose by 203,000 in November and the jobless rate
fell to 7%, propelling a rally on Wall Street.
Looking ahead, Heider said the most significant moves could come
Thursday, when the market will take in monthly retail-sales data.
Economists polled by MarketWatch expect that retail sales rose 0.3%
in November. The data will incorporate sales from Black Friday,
which Heider described as "disappointing" for retailers, albeit
offset by "strong" results for e-commerce. Check out: More
shoppers, but spending drops.
Mike Serio, regional chief investment officer for Wells Fargo
Private Bank, also emphasized Thursday could offer the most for
investors to chew on. "Thursday will be the big day," he said,
noting it will bring an October reading for business inventories,
in addition to retail sales.
Last week brought a report showing the U.S. economy expanded by
3.6% in the third quarter, but a huge buildup in inventories
accounted for almost half of the growth, and that likely means
slower growth for the fourth quarter. So Serio said he will look
for "a goldilocks number" in Thursday's inventories report -- "not
too high, not too low." Economists surveyed by MarketWatch expect
business inventories rose 0.3% in October.
In the past week, stocks finished mostly lower, with the S&P
500(SPX) down less than 0.1% for the week, while the Dow Jones
Industrial Average dipped 0.4%. The Nasdaq Composite (RIXF)
advanced less than 0.1% for the week.
The S&P 500 snapped an eight-week winning streak, but the
benchmark index remains up 26.6% for the year and just below its
record intraday peak of 1,813.55 hit on Nov. 29. The Dow also ended
an eight-week advance, yet it's up 22.3% for the year.
Terry Sandven, chief equity strategist at U.S. Bank Wealth
Management, described the stock market's performance in 2013 as
"superb" and "well above expectations," adding he still thinks the
"path of least resistance is up."
He sees several factors driving stocks higher, including the
improving economy and progress in Washington, with government
leaders showing a "willingness to compromise." In addition,
investors are becoming less worried about the Federal Reserve
tapering its bond-buying program that has supported stocks, Sandven
said.
"The market seems increasingly comfortable with tapering," he
told MarketWatch. Other strategists also made that point Friday,
when the encouraging jobs report boosted stocks, in a shift from
prior sessions when upbeat economic data sparked tapering fears
that weighed on equities. The Federal Open Market Committee meets
next on Dec. 17 and 18. Estimates for when the Fed may scale back
bond buying generally range from December to March.
In terms of earnings reports, clothing retailers Men's Wearhouse
Inc. (MW) and Lululemon Athletica Inc.(LULU) will release their
quarterly results on Wednesday and Thursday, respectively. Home
builders Toll Brothers Inc. (TOL) and Hovnanian Enterprises Inc.
(HOV) will report on Tuesday and Thursday.
Wells Fargo's Serio notes investors may want to do some
rebalancing this week in their portfolios as the year winds down,
but one should "be very tax aware of whatever you do." It can be
uncomfortable to sell your winners and buy your losers as part of
the rebalancing process, but "over long periods of time, that
significantly adds to your return," he added. (Read more: 2013 tax
moves and trading tips for year-end
http://www.marketwatch.com/story/2013-tax-moves-and-trading-tips-for-year-end-2013-12-04.).
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