The market will look to recover from its New Year's hangover in the coming week. Stocks have slumped since the market reopened for business after an extended break. In 2007's three days of trading, the Dow fell 65 points, or 0.5%, and the S&P 500 was down 8 points, or 0.6%. The Nasdaq, meanwhile, rose about 19 points, or 0.8%. Although it's easy to slough off a holiday-shortened week of trading, market strategists are wary of starting the year on the wrong foot. According to Miller Tabak senior market strategist Phil Roth, "the first five days of January tends to forecast the month as a whole, and January tends to forecast the year, especially down Januarys." Stocks took an especially hard dive on Friday after an unexpectedly strong jobs report that appeared to diminish the chance of an interest rate cut anytime in the near future. Traders have been hoping the Fed will cut the fed funds target, the rate banks charge each other for overnight loans, sometime this year. The target has been at 5.25% since June, and the Fed has gone four meetings leaving it unchanged. Interest rate worries overrode the market's other big story last week which was the downward spiral in oil prices. Crude prices fell roughly 8% over the week and closed Friday at $56.31 a barrel.
Oil could continue to influence trading in the coming week, as could the government's retail sales report and the first big-name earnings release for the fourth quarter.