Tags: Oil's | Economic | Impact | May | Seen | This | Week

Oil's Economic Impact May Be Seen This Week

Sunday, 28 August 2005 12:00 AM

The evidence will come later this week as retailers and automakers report their monthly results for August, the Conference Board releases the latest report on consumer confidence, and the Commerce Department reports on personal spending for July. The Federal Reserve will also release the minutes of the previous week's meeting, and investors will look closely for any sign that the Fed may halt its slow, steady parade of interest-rate hikes, which could slow the economy further if they continue.

Last week, two consecutive sessions of record oil prices sapped any buying momentum on Wall Street and pushed stocks to their lowest levels in seven weeks. For the week, the Dow Jones industrials lost 1.53 percent, the Standard & Poor's 500 index fell 0.69 percent and the Nasdaq composite index slid 1.2 percent.

ECONOMIC DATA

The Conference Board's consumer confidence index could see a larger-than-expected swing lower as consumers wrestle with higher gasoline prices. The index, due out Tuesday, is expected to fall to 101.5 for August, down from the 103.2 reading posted in July.

While not normally a market-moving report, investors will keep a close eye on the Commerce Department's personal income and spending report, due Thursday. Incomes are expected to rise 0.5 percent in July, on par with June's increase. And economists expect personal spending to rise 1 percent from 0.8 percent in June - though high oil prices may influence that number considerably.

Also Thursday, the Institute for Supply Management will issue its latest manufacturing index for August. The index is expected to come in at 57, up slightly from July's 56.6 reading. A lower number could create worries that higher energy and fuel costs are starting to crimp expansion in the manufacturing sector.

The Labor Department's job creation report, due Friday, has been difficult to predict lately. Economists expect 190,000 new jobs to have been created in July, down slightly from June's 207,000 jobs. An extremely different number, high or low, could cause a great deal of volatility.

And finally, the Commerce Department will report on the nation's gross domestic product on Wednesday. Second-quarter GDP growth is expected to come in at 3.4 percent, the same as last month's preliminary figure.

EARNINGS

Companies are firmly in between second- and third-quarter earnings seasons. No major corporations are slated to release earnings in the week ahead, though if companies have experienced a weaker-than-expected quarter to date, investors may see disappointing outlooks and earnings guidance this week.

EVENTS

The Federal Reserve will release its Aug. 8 meeting minutes Tuesday afternoon. Since the Fed started releasing them in between Fed meetings back in January, the minutes have caused a great deal of activity on Wall Street as investors parse the language and attempt, perhaps too ambitiously, to predict the Fed's next move on interest rates. Expect trading on Tuesday to be volatile.

The nation's auto makers will announce their August sales results on Thursday. The latest round of employee discount programs is likely to boost General Motors Corp. and Ford Motor Co. sales, but investors would be right to wonder how long the sales boom can last in the face of $3 per gallon gasoline.

Also starting on Thursday, the nation's retailers will begin releasing their monthly sales data, which will stretch into next week. Individual retail stocks will see increased volatility, and the overall market could drop if more retailers begin warning that their sales have been hurt by an oil-fueled drop-off in consumer spending.

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The evidence will come later this week as retailers and automakers report their monthly results for August, the Conference Board releases the latest report on consumer confidence, and the Commerce Department reports on personal spending for July. The Federal Reserve will...
Oil's,Economic,Impact,May,Seen,This,Week
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2005-00-28
Sunday, 28 August 2005 12:00 AM
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