NEW YORK – As if Intel's (INTC) profit bomb didn't put enough of a damper on the summer-ending long weekend, investors returning next week after Labor Day will be wary of a market offering as much pitfall as promise.
Continued strength in oil prices, inconsistent economic news and worries about the outlook for corporate profits will make for a bearish mood on Wall Street, although volume should pick up after a period of thin, choppy trade.
U.S. financial markets will be closed on Monday for the Labor Day holiday.
Hurricane Frances (search), poised to hit Florida, clouded the horizon, albeit bearing a silver lining for some.
Earnings news slows to a trickle next week, but a spate of corporate conferences will draw attention as investors look for signs of additional profit weakness following Intel Corp.'s dismal midquarter business update on Thursday.
Federal Reserve (search) Chairman Alan Greenspan (search) will testify on Capitol Hill on Wednesday, though Friday's U.S. employment report preserved the prospect of the Fed maintaining its measured pace of interest rate increases.
"September is the worst month for equity market performance," said Gordon Fowler, chief investment officer for The Glenmede Trust Company. "It is generally a month when managements guide down expectations."
On Friday, the New York Stock Exchange (search) volume levels remained low. Just 924 million shares changed hands, below the NYSE's daily average last year of 1.4 billion.
The blue-chip Dow Jones industrial average closed slightly lower at 10,260.20. The jobs report that nearly matched analyst expectations helped stem losses on the index.
For the week, the Dow gained 0.64 percent, the broad Standard & Poor's 500 rose 0.54 percent, but the tech-laden Nasdaq Composite Index slid 0.95 percent.
September is a "confession" period for companies, and with a string of technology conferences next week, investors will be keeping their ears open for news bites.
Intel's downward revision of its revenue and profit-margin forecast, citing weakened chip demand, has only heightened concerns of market watchers.
A couple of earnings are scheduled for next week. Comverse Technology Inc., which supplies voicemail software for mobile companies, will report Wednesday and analog semiconductor maker National Semiconductor Corp. will report Thursday.
Oil will also be in focus, analysts said, although prices have fallen from peak levels. If supply concerns, arising from pipeline sabotage in Iraq and worries over production at Russian oil company Yukos worsen, then there could be another run-up in prices.
"Oil prices are going to be a continuing source of concern, and we have to watch out for what is happening in the Middle East," Fowler said. "The less terrorist activity we see, the more downward pressure we will see on oil prices."
U.S. October crude futures (search) ended Friday's trading in New York at $43.99 a barrel, up from $43.17 a week ago.
Depending on the damage caused by Hurricane Frances, earnings of insurance companies, such as Allstate Corp. , the No. 2 U.S. home and auto insurer, and The St. Paul Travelers Companies Inc., could be hurt in the short term.
"The market has been focusing on insurance stocks all week," said Bryan Piskorowski, market analyst at Wachovia Securities LLC. in Richmond. "There will be focus on restaurant stocks and retailers that blamed August same-store sales on (Hurricane) Charley. Home Depots and Lowes of the world will also be in focus given the boarding up and repair thereafter."
Greenspan could also be in the spotlight when he testifies before the House Budget Committee on Wednesday, especially after Friday's jobs report.
The Labor Department (search) said employers added 144,000 workers to their payrolls in August, and revised upward hiring numbers for the previous two months, increasing expectations that the Fed will continue to hike rates.
"We have Greenspan speaking to the Budget Committee, and the idea is that given today's employment data, we will see if there is any change in tone," said Piskorowski added.