NEW YORK – Record crude oil prices, a tidal wave of quarterly earnings reports and anxiety ahead of the U.S. presidential election may pin U.S. stocks down next week.
A steady stream of economic data including the government's first read on third-quarter gross domestic product (search) and reports on durable goods and Midwest manufacturing activity will also provide investors with grist for trading.
Next week also marks the last full week of trading before the U.S. presidential election on Nov. 2. President Bush and Democratic challenger Sen. John Kerry are neck-and-neck in many opinion polls, sparking uncertainty in the markets.
"I think that the magnifying glass that the election is putting on a lot of these issues is going to keep the market trading in this range," said David Legeay, senior vice president and director of portfolio management, McDonald Financial Group. "But I don't really see a catalyst even after the election to move the market up significantly."
There is also some worry that there will be no clear winner after election day, leaving the markets in wallowing in uncertainty.
"The election may be more nerve-racking than the (New York) Yankees and Boston (Red Sox) games," Howard Silverblatt, equity market analyst at Standard & Poor's. "We're assuming we'll wake up with a winner on November 3, but the situation in Florida opened up the floodgates and now there may be litigation over the results."
In 2000, it took weeks to determine the winner of the presidential election due to voting irregularities in Florida.
Investors can expect another extremely busy week of earnings reports from key companies including Procter & Gamble Co. (PG), Boeing Co. (BA), BellSouth Corp. (BLS) and energy companies Exxon Mobil Corp. (XOM), Marathon Oil Corp. (MRO) and ConocoPhillips (COP).
"Obviously earnings are going to a big part of next week," McDonald Financial's Legeay, said. "I would expect more of the same, which is mixed and volatile earnings, with particular attention paid to the guidance. There's a big concern on the Street about where earnings are going in the future."
So far, earnings have not offered the market a clear direction. Of the 245 S&P companies that have reported, nearly 26 percent have missed on revenue, while nearly 47 percent have exceeded Wall Street expectations on earnings per share, according to data from Reuters Estimates.
For the week, the Dow Jones Industrial average (search) ended down 1.77 percent, the Nasdaq Composite (search) advanced 0.19 percent and the Standard & Poor's 500 index (search) ended off 1.12 percent.
Wall Street will also keep a close eye on oil, which climbed to a fresh high of $55.50 a barrel on Friday on the New York Mercantile Exchange (search). If oil stays above $50 a barrel for a sustained period, there is concern that it will cut into corporate earnings and consumer spending.
"We've got bubbling oil prices again," Bryan Piskorowski, market analyst at Wachovia Securities LLC., said. "With that still in the mix, it's a day-to-day hurdle for the market."
The government will take its first stab at estimating economic growth, or GDP, for the third quarter on Friday. Analysts are expecting an increase of 4 percent.
The Chicago purchasing managers survey on manufacturing activity in the Midwest is due on Friday and the Commerce Department will release data on the orders of big-ticket items on Wednesday.