NEW YORK – Stocks could make fresh gains next week as sectors such as technology draw new money, but overall trading volumes will likely be limited as many investors hit the road for the Thanksgiving holiday, according to analysts.
Stock markets will close all dayThursday for Thanksgiving Day and will pull down the shutters early Friday at 1 p.m.
But before investors head for home, they will have to contend with economic reports that should provide further clues about the health of the U.S. economy.
Among the reports scheduled for release are the Redbook Research weekly store sales reportTuesday, initial jobless claims reportWednesday and the final University of Michigan consumer sentiment index for November.
In addition, the holiday-shortened week has a roster of speeches by several Fed officials, including one on the U.S. economy by Federal Reserve Bank of Chicago President Michael Moskow Monday.
On Wednesday, Federal Reserve Bank of St. Louis President William Poole will speak on "Communicating the Fed's Policy Stance" at an event in London.
With inflation still very much a concern, analysts said investors may spend time sifting through economic reports and comments from Fed officials for signs showing when the Fed may stop raising interest rates, or just how far it is willing to go with its recent spate of increases.
But despite lingering interest rate and inflation worries, U.S. stock rallied this week, helped in part by increasing interest in sectors such as technology, which until recently were on the back burner as investors piled into areas such as energy.
Declining crude oil prices have also lent support to the market, raising hopes consumer will have more cash to spend this holiday season as heating costs ease.
Oil sank below $56 a barrelFriday for the first time since the end of June, as investors grew confident that large fuel stockpiles will see the world's consumers through cold winter weather.
At Friday's close, the Dow Jones Industrial average closed at its highest level in 8 months. For the week, it was up 0.8 percent, the fourth straight week of gains.
Both the tech-laden Nasdaq Composite Index and the Standard & Poor's 500 Indexsurged to their highest closes in almost 4-1/2-years. The Nasdaq rose for a fifth consecutive week, up 1.12 percent, while the S&P rose 1.10 percent, its fourth straight weekly gain.
"Psychologically, the market obviously feels a lot better than it did in October and, typically, you'll get some sort of year-end kind of rally, and we feel that's what's going on," said Evan Olsen, head of equity trading at Stephens Inc.
But he noted that, with the holiday, a lot investors may be less inclined to be in the market. In addition, corporate earnings reports for the recent quarter are winding down, leaving the market with little to go on.
Among a few remaining earnings reports likely to help set the tone for stock investors is Campbell Soup Co.'s fiscal first-quarter results, fiscal fourth-quarter results for farm equipment maker Deere & Co. and fiscal second- quarter results for ketchup and packaged food producer H.J. Heinz Co..
Another event closely watched by investors will be the release Tuesday of the Federal Open Market Committee's minutes for its Nov. 1 meeting at which short-term rates were raised for the 12th time since June 2004.
"We're coming off a very positive week, so the wind is clearly at our backs right now," said Hans Olsen, chief investment officer at Bingham Legg Advisers in Boston.
"The good news is that probably the Santa Clause rally will happen, but the bad news is it takes the focus off some of the real issues that will impede the market going forward."
Analysts said the upcoming week could also see investors tread cautiously after this week's surprise announcement from the European Central Bank that it is ready to raise rates in December for the first time in five years.
"One area that was expected to resist raising rates was Europe, but now with the ECB set to throw in the towel and start raising rates, I think that puts a little bit of inflation fears back into the market," said Larry Peruzzi, senior equity trader at The Boston Company Asset Management, a Mellon subsidiary.