New Years Resolutions

[PDC ™]

happy belated New year. The stars say we see a rally. LOL

Posted by: Ruellit
In reply to: None Date:1/1/2006 6:17:36 PM
Post #of 16099

Stars May Be Aligned for Jan. Stock Rally

Sunday January 1, 5:07 pm ET
By Michael J. Martinez, AP Business Writer

Wall Street Could Enjoy Good Start in 2006 if Economic Indicators Fall Into Place This Week

http://biz.yahoo.com/ap/060101/wall_street_week_ahead.html?.v=5

NEW YORK (AP) -- After a volatile 2005 and meager returns to show for it, investors are hoping 2006 will bring better fortunes. And if there's good news next week, the new year could get off to a good start.
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Last January, stocks tumbled after an impressive December rally. Word that the Federal Reserve would continue hiking interest rates, combined with mediocre jobs figures, worried investors considerably. The Standard & Poor's 500 dropped 2 percent in the first two trading days of 2005.

Yet this year could be far different. First of all, there was no real December rally, so it's safe to say stocks aren't overbought. Second, the Fed has signaled that it's closer to ending its regime of rate hikes. That could be reinforced Tuesday as the Fed releases the minutes of its Dec. 13 meeting.

And the Labor Department's payroll figures for December should point to steady job growth -- strong enough to keep consumers spending, but slow enough to forestall inflation.

Should everything fall into place -- never a sure thing on Wall Street, but still possible -- stocks could avoid the January malaise that plagued them last year.

Certainly, the stock market could stand an infusion of optimism after a disappointing December. This past week, the Dow Jones industrials 1.52 percent, the S&P lost 1.61 percent and the Nasdaq composite index dropped 1.96 percent.

That took year's returns lower and pushed the Dow into negative territory for 2005. For the year, the Dow was off 0.61 percent, while the S&P rose 3 and the Nasdaq climbed 1.37 percent.

ECONOMIC DATA

Friday's jobs data from the Labor Department will be the key to determining whether January 2006 is anything like January 2005. Economists estimate the economy will have created 200,000 jobs in December, down slightly from 215,000 in November. A lower-than-expected number, if not sharply lower, could actually boost stocks, since fewer new jobs would mean fewer wages and less of a chance for inflation to take hold.

The Institute for Supply Management will release its December indexes next week. The ISM manufacturing index, which measures growth in that sector, is expected to come in at 57, compared to a 58.1 reading in November. And the ISM services index is expected to post a reading of 59 for December, up from November's 58.5.

EVENTS

On Tuesday, the Federal Reserve will release the minutes from its Dec. 13 meeting. Last year, the minutes caused stocks to slide as the Fed showed it remained committed to raising interest rates. This time, the minutes could prompt a rally if they show that the Fed's Open Market Committee members are willing to end rate hikes soon.