Despite oil prices reaching a new record high above $127, the worst consumer confidence in 28 years and the worst housing starts in individual family homes since 1991, the stock markets finished on a higher note last week. The Dow was up 1.89%; the S&P 500 was up 2.67% and the Nasdaq finished the week up 3.41%. Can this winning streak continue into next week?

First let’s look at oil: after President Bush’s begging while visiting Saudi Arabia, the Saudis have agreed to increase oil output by 300,000 barrels a day. Bush wasn’t happy though, saying it isn’t enough to ease U.S. energy prices. If traders take this as a negative sign, we could see prices going up further and that could put a damper on stocks in the week to come.

Next week we’ll see earnings from Hewlett Packard [[hp]], Home Depot [[hd]], Target [[tgt]], Gap [[gps]], Campbell Soup [[cpb]] and Lowe [[low]]. If retailers like Target and Home Depot can show reasonable results, it might inspire hope that consumer spending in essentials is at least propping up these companies. If Hewlett Packard can show strong results as other technology giants like Intel [[intc]] have done, it would be a strong sign that tech spending has continued and could lift other tech companies.

Also keep an eye out for the PPI on Tuesday as any inflationary pressures there could quickly spread to the rest of the economy, and the CPI. But more importantly, any increase in oil and other major commodities could put pressure on the stock markets. Having said that, in the past few months oil has climbed tremendously yet stocks have continued to move steadily upward as many companies reported better-than-expected earnings.

Subscribe by RSS Subscribe by Email

Comment by JerseyBoy

2008-05-18 16:49:12

Stocks could pause their gains this week & if that’s the case, i’d see it as a healthy correction!

Reply to this comment