While there are still plenty of earnings reports to be read, the strength of the economy retakes the spotlight in the coming week as traders assess the "soft landing" scenario.
Stocks sold off on Friday after a government report showed that U.S. economic growth slowed to 1.6% during the third quarter. The gross domestic product figure was below economists' expectations for a 2% increase and well off the second quarter's 2.6% pace.
The weak figure, while reassuring investors that the
won't tighten rates any time soon, raised the premise that the so-called soft landing for the economy may become a bit bumpier.
"The market's worry has shifted from inflation to growth," says Larry Perruzi, equity trader at Boston Company Asset Management. "The bulls are going to be looking for something to refute that low GDP number next week in order to take the market higher."
The surprisingly soft GDP report heightens the importance of next Friday's October nonfarm payroll report. Analysts currently expect that 125,000 jobs were added in the month, a big jump from September's disappointing growth of 51,000 jobs. The unemployment rate is projected to move up slightly to 4.7% from 4.6%.
"The consumer is keeping this economy in expansionary mode," says Rich Yamarone, chief economist at Argus Research. "And the consumer's ability to keep spending depends far more on employment than falling energy prices."
Take This Jobs Number
The jobs number may be next week's linchpin, but there is no lack of economic data leading up to it, starting with September personal-income and spending data on Monday. Economists surveyed by Thomson First Call are looking for income growth to remain steady at 0.3%, and spending to rise 0.3%, up from 0.1% growth in August.
Another point of interest on Monday will be a speech on monetary policy by Richmond Fed President Jeffrey Lacker. For those scoring at home, it was Lacker who was the lone dissenter at the last two FOMC meetings, each time voting to raise rates rather than pause.
Among Tuesday's economic reports is the employment cost index for the third quarter, which is anticipated to show a rise of 0.9%.
Also on tap for Tuesday are the Chicago PMI for October and the October consumer confidence index. Economists expect the Chicago PMI to fall to 58 from 62 from September, and the consumer confidence index to jump to 108.5 from 104.5 month over month.
Wednesday, the first day of November, will see the release of auto- and truck-sales figures for October. The expectation is for 5.3 million cars to be sold, on par with the prior month, while economists predict truck sales remained stuck at 7.6 million units month over month.
The October ISM index also will be released Wednesday, and it is expected to rise to 53.2 from 52.9.
September factory orders will be Thursday's headline number. Orders are expected to rise by 1.5%, up from a flat figure for August.
Of course, these economic releases are a build-up to the week's biggest market mover, Friday's jobs report.
"If the October number comes in much below estimates, it could spook a market that is showing signs of being overbought, a condition referencing the fact that there has not been much of a pull back in stock price since this rally began in mid-August." says Robert Pavlik, chief investment officer at Oaktree Asset Management.
Earnings Still Abound
Aside from economic data, next week also features the last major wave of third-quarter earnings announcements.
The action begins Monday with the report from Dow component
. Analysts polled by Thomson First Call expect the telecom giant to post earnings of 66 cents a share, even with last year, on revenue of $23.03 billion.
Investors also will hear from
. Billboard and radio giant
Clear Channel Communications
, which announced Wednesday that it is up for sale, also will report.
Tuesday is Halloween, but that won't scare away a slew of companies reporting quarterly results, including
Archer Daniels Midland
Also on tap for Tuesday are announcements from media companies
Martha Stewart Living
, owner of Ticketmaster, Ask.com and Evite.
Procter & Gamble
takes center stage on Tuesday as well. Wall Street is looking for the company to post earnings of 78 cents a share for its first quarter, a penny above a year ago, on revenue of $18.56 billion.
Among the companies reporting Wednesday are
Investors also will get a read on results from media giant
. Analysts expect the company to earn 21 cents a share, up from 19 cents last year, on $11.09 billion in revenue.
Outside of earnings, auto giants
will report their October sales on Wednesday.
October sales for retailers will be in the spotlight before the bell Thursday. The day also will be the heaviest day of the week for earnings, with companies such as
on the docket.
Other companies set to deliver results on Thursday include
Whole Foods Market
Friday's highlights include reports from
Medco Health Solutions
"S&P earnings have been outstanding so far and that's one of the reasons why the
market move upward has been so strong," says Larry Wachtel, senior market analyst at Wachovia. "But after this wave of earnings, it's hard to conjure up a reason as to how this market can top itself."