Markets will slowly shake off the summer slumber next week as vacationing investors return to retool portfolios and grapple with employment data heading into the month of September.
In the coming week, with the market closed on Monday for the Labor Day holiday, earnings releases will be scarce. Investors likely will focus on economic data and the possibility of profit-taking if shares begin their traditional September swoon. Over the last 15 years, the
averaged a loss of 0.3% in the Labor Day-shortened trading week, generally on lighter-than-usual volume.
"I think it ends up being a sporadic week as people slowly come back from the holiday. Tuesday will look like Friday. It's not like people are going to say 'Here's the end of the three-day weekend -- let's go fellas!' Volume will begin to pick up gradually," said Larry Wachtel, senior vice president at Prudential Securities. "Beyond that, we have the month of September, which has consistently been the worst month for the market."
September is much reviled for being the worst month for stock performance, with the third-quarter preannouncement season cranking up at midmonth and tax-loss selling taking hold at mutual funds. From 1950 until 2000, the
Dow Jones Industrial Average
stumbled 0.6% on average during the month of September, according to the
Stock Trader's Almanac
Along with still-anemic volume and the start of tax-loss selling, one reason stocks could stumble next week is that they have yet to retrench significantly after nearly six months of rallying. Over the last week, all three major market indices posted gains, with the Dow up 66.95 points, the
index up 45.26 points, and the S&P 500 up 14.96 points.
But the direction of the tape will be most influenced by the slate of economic releases next week. After the Chicago purchasing managers index jumped to a 15-month high of 58.9 on Friday, from the 55.9 reading for July, hopes are high that national data will show similar signs of strength.
"The economic numbers are going to be OK. Watch the purchasing managers index, because we just got a bracing report from the Chicago region, which can foreshadow the national data. But on Friday the big number for the week will be nonfarm payrolls, which have been trending lower and getting close to break-even," said Wachtel. "Some estimates even show a small increase and in the Chicago report the index for jobs expanded. This might mean the manufacturing side of employment could be picking up."
On Tuesday, the week kicks off with the Institute for Supply Management's index, expected to come in at 53.0 for August, up from 51.8 in July. Automakers will also be in the market spotlight on Tuesday, with the release of car and truck sales, which are expected to cool slightly.
The ISM services index for August comes out on Wednesday, along with the Fed's beige book and construction spending for July, expected to rise 0.4%. Thursday starts a barrage of much-anticipated employment data, with initial jobless claims for the week ending Aug. 30 expected to stay below 400,000 for another week. Also on Thursday, look for a revised second-quarter productivity number and factory orders for the month of July.
Friday will be the biggest day for economic releases, however. Coming off better-than-expected weekly jobs reports, nonfarm payrolls for August are expected to show a gain of 10,000 jobs, up from July's slide of 44,000 jobs. The unemployment rate is expected to remain unchanged at 6.2%, with hourly earnings continuing to show 0.3% growth and the average workweek up slightly from July's mark of 33.6.
While earnings releases will be few and far between, some notable names will be talking up quarterly results next week. On Tuesday,
Mandalay Bay Resorts Group
will announce after the bell, followed by ketchup concern
on Wednesday. Thursday brings results from
, which could affect semiconductor stocks, a sector that's attracted loads of attention this summer.