NEW YORK – Trading will be at a minimum on Wall Street next week, with the market closed Thursday for the Thanksgiving holiday, but investors' attention will quickly turn to retail sales the following day.
Among the scant data set for release next week is the final reading of consumer sentiment from the University of Michigan, due on Wednesday.
The real test of the U.S. shopper's staying power will come on "Black Friday," the unofficial kickoff of the Christmas shopping season.
Earnings releases also slow down to a trickle next week, with only six Standard & Poor's 500 components set to report results. Among the most closely watched will be upscale department store chain Nordstrom Inc. (JWN), which releases its quarterly scorecard Monday.
Luxury retailers have been optimistic about the outlook for holiday shopping. Nordstrom was among the few retailers to post better-than-expected same-store sales in October.
No. 2 home improvement chain Lowe's Companies Inc. (LOW) is another key company also expected to report results Monday.
Shares of home builders and related companies were battered this week after Lowe's rival Home Depot Inc. (HD) and housewares retailer Williams-Sonoma Inc. (WSM) both cut their earnings outlooks for the rest of the year, blaming a slowdown in the U.S. housing market.
Signals From the Bond Market
Adding to housing-sector woes was a report on Friday showing October had the sharpest decline in housing starts since 2000. But its impact may not weigh heavily on the market since some investors consider it positive for stocks if the housing slowdown pushes the Federal Reserve to loosen monetary policy and cut interest rates.
"The Street has a very short memory, and there's a tremendous bullish bias, but bonds have been telling the opposite story," said Gary Shilling, president of A. Gary Shilling & Co., an investment research firm in Springfield, N.J.
"Bonds are telling you: 'Not only is the Fed through with raising rates, but we've probably got economic weakness.' My suspicion is that bonds have it right," Shilling added. "Yes, interest rates are going down, but the damage to profits more than offsets that."
Normal trading hours are in effect next week from Monday through Wednesday, with the stock market closed Thursday and shutting early Friday. The bond market's early closing Wednesday may mean many stock players also will leave early for the long holiday weekend.
"Next week is going to be a slow week unless there's some sort of geopolitical action, which could maybe move the market," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, N.J. "In a slow week, if there's some sort of big news, the move could be much more volatile than usual because volume will be light."
Other economic releases include the index of leading U.S. economic indicators for October on Monday and the weekly mortgage market index on Wednesday.
Red-Hot Stocks and Weary Bulls
On Friday, the Dow Jones industrial average rose 36.74 points, or 0.30 percent, to finish at a record 12,342.56 — also its session high and a lifetime high so far. Since the start of October, the Dow has achieved 18 record closes. With Friday's closing bell, the Dow had notched a sixth straight session of gains — its longest winning streak in a year.
The Standard & Poor's 500 Index gained 1.44 points, or 0.10 percent, to end on Friday at 1,401.20. But the Nasdaq Composite Index slipped 3.20 points, or 0.13 percent, to close at 2,445.86.
For the week, the Dow rose 1.9 percent and the Nasdaq jumped 2.4 percent — marking a second straight week of gains for both. The S&P 500 finished the week up 1.5 percent.
"The bulls are getting tired," said Michael Metz, chief investment strategist at Oppenheimer & Co. in New York. "They've done their work and you've had this crazy stampede into the marketplace. I think there's time for a rest at least."
Until they hear from retailers about the results from Black Friday, bulls and bears both may just have to take that rest and enjoy some turkey.