NEW YORK – A nervous U.S. stock market fretting over high oil prices and inflation will watch Federal Reserve Chairman Alan Greenspan (search) next week for any unexpected hints on the pace of future interest-rate rises.
After a disappointing first quarter when the blue-chip Dow and the broader Standard & Poor's 500 both fell 2.6 percent and the tech-heavy Nasdaq sank 8.1 percent, winter-weary Wall Street will pounce on any sign from Greenspan that spring may bring new vitality to the market.
History is on investors' side. The Stock Trader's Almanac (search) says April has been the best month for the Dow average since 1950.
Nevertheless, Friday, stocks continued to slide, giving up gains made in a mid-week rally. The Dow and the Nasdaq ended the week down slightly, with the S&P 500 up a mere 0.1 percent.
"A lot of traders are very nervous. They don't know which way to jump," said Michael Metz, chief investment strategist at Oppenheimer & Co.
"It's an environment where there is really no external stimulus, so you watch the market action itself to see what it's signaling to traders — whether they should buy more or unload."
With little in the way of earnings or major economic data for investors to trade on next week, Wall Street's focus will be on Greenspan's three public appearances.
Investors' attention also will stay riveted on sky-high oil prices. Rising crude costs weigh on most stocks because they can curb consumer spending and hurt corporate profits.
Oil prices surged to a record near $58 a barrel Friday, powered by a report the day before from top energy derivatives trader Goldman Sachs that said oil markets may have entered a "super-spike" period, which could eventually drive prices toward $105.
Appropriately, Greenspan's first appearance of the week will address the energy situation. Tuesday, the Fed chairman is due to speak via satellite before the National Petrochemical and Refiners Association's (search) International Petrochemical Conference in San Antonio, Texas.
Wednesday, the Fed chairman will testify before the Senate Banking Committee (search) on regulatory reform of government-sponsored enterprises, or GSEs, like mortgage companies Freddie Mac and Fannie Mae .
Greenspan said recently the GSEs' mortgage holdings should be slashed to avoid "almost inevitable" problems for the U.S. financial system. The companies, which together account for nearly half of total residential mortgage debt outstanding, face the possibility of tougher supervision.
Friday, Greenspan will speak on consumer finance at a Fed-sponsored community affairs conference in Washington.
"The focus will be on Greenspan, oil and interest rates, as the market tries to discern if inflation is going to pick up — or if the economy is cooling off," said Jeffrey Saut, chief investment strategist at Raymond James Financial.
"There are a lot of cross-currents right here. It's a very difficult market."
Analysts said a raft of economic reports that were published Friday implied the Fed could extend its campaign of edging interest rates up in quarter-percentage-point increments to curb inflation rather than with bigger, more disruptive moves.
U.S. employers added only half the number of new jobs last month that were expected, which together with data showing slower growth in manufacturing and services eased some concerns about steeper interest-rate rises in the future.
The Fed has been on a rate-rising campaign since last June, pushing its bellwether federal funds rate up seven times successively by a quarter-percentage point at a time to 2.75 percent. It cited concern over signs of renewed pricing pressure when it last raised rates on March 22.
Oppenheimer's Metz said the dearth of corporate and economic data next week left a potentially dangerous news vacuum in the marketplace.
The current nervousness in stock markets "is an indication that short-term traders dominate the arena," he added.
"Long-term investors are very skittish here," Metz said. "If you look at fund flows, for example, they are just not in the arena.
"It's hedge funds, it's short-term traders, it's proprietary traders — they really are whipping the market around day to day."
In next week's corporate news, Dow component aluminum producer Alcoa Inc. is due to report first-quarter earnings Wednesday. And consulting firm Accenture reports second-quarter results Thursday.
A number of major retailers unveil same-store sales figures Thursday.