After recent acts of terrorism and a noxious mutual fund scandal, investors are desperately in need of some holiday cheer. In the week ahead, they might just get it.
While past isn't always prologue, the day before and after Thanksgiving generally have been positive for the market, yielding net gains in 42 of the last 51 years, according to
The Stock Traders Almanac
. "We attributed the Thanksgiving strength to the 'holiday spirit' and to the fact that November has been a top performer since 1950," the Almanac says.
Stocks tend to do well in November and December, as investors plow money into the market in anticipation of strong inflows in January, when year-end bonuses and pension fund money is invested into the market.
Last year, the
surged 255 points on the Wednesday before Thanksgiving, before pulling back slightly in a shortened session on Friday. "You've got some favorable seasonality next week," said John Hughes, equity strategist at Shields & Co. "I think we'll have a pretty quiet week."
Art Hogan, chief market analyst at Jefferies, is expecting volume to be very thin in the week ahead, with most of the action coming on Monday and Tuesday. "I would say after the selling we've seen over the past two weeks, the market's tendency will probably be to go higher but on low volume," he said.
Still, analysts note that the escalation of the violence around the globe and the recent mutual fund scandal could dampen any enthusiasm for stocks. "We're concerned there's some growing risk, some deterioration in the overall background of the market," Hughes said. "People have been looking for reasons to sell."
The Thanksgiving period is hugely important for retailers, who conduct a big chunk of their business over this period. Last year, the nation's biggest retailer,
, reported record one-day sales of $1.43 billion on the day after Thanksgiving. The company said this week that it is on track to meet its forecast of 3%-to-5% same-store sales growth for November.
The most important economic news for the week will come on Tuesday and Wednesday. On Tuesday, a revised estimate to third-quarter gross domestic product is expected to be released along with the Conference Board's report on consumer confidence for November and existing-home sales for October.
Economists are looking for a slight upward revision in the GDP report to 7.3% from 7.2% previously. Existing-home sales are projected to come in at a 6.50 million rate, down from the 6.69 million pace in September. Analysts expect consumer confidence to rise to 82.8 from 81.1 in October.
Wednesday will bring personal income and spending, durable goods orders, initial unemployment claims, the Chicago purchasing manager's index, new-home sales and the University of Michigan's consumer sentiment survey for November.
The Chicago PMI is often considered a proxy for the national survey, which will come out in the first week of December, so investors will be looking for any clues about the state of manufacturing overall. The sector has enjoyed four straight months of growth, although manufacturing employment has declined for 37 straight months. The Chicago PMI is expected to rise to 56.5 from a prior reading of 55.
Although durable goods orders are typically volatile, they can give investors an early read on capital spending. Economists are looking for orders to rise 0.5%. Meanwhile, personal income and spending data for October will show how the consumer is holding up now that tax breaks and other incentives have begun to wear off.
While most of the third-quarter earnings have now been released, a few companies are scheduled to post results next week.
are expected to chime in on Monday, while
are on tap for Wednesday.