U.S. jobs report on tap along with interest rate decisions in Europe
NEW YORK (MarketWatch) -- Stocks will enter the month of December with a sense of optimism that much of the dismal environment for corporate profits has already been discounted by the market, even as upcoming reports, including the key jobs report on Friday, are expected to show the economic picture is still worsening.
Next week, "we'll have a slew of economic numbers, including what I expect to be a rise to 6.7% in unemployment in November," said Peter Cardillo, market economist at Avalon Partners.
However, "the market has already priced in another quarter or two of real bad economic news, and that things could start to stabilize in the second quarter" of next year, he said.
Dow's best 5-day gain ever
The market gained on so-called Black Friday, marking its fifth-straight session of gains, with grim prospects for retailers failing to dent optimism at the traditional start of the U.S. holiday-shopping season. See Market Snapshot.
The Dow Jones Industrial Average finished up 102 points, or 1.2%, at 8,829. While the blue-chip average fell 5.3% for the month of November, it jumped 9.2% over the past week.
Even more impressive, the Dow gained 1,277 points, or 17%, in just five sessions, marking its best five-day percentage gain since 1932, and its best five-day point gain on record.
The S&P 500 Index rose 8 points, or 1%, to 896 Friday. The broad index fell 7.4% in November, but it surged 12% for the week.
The Nasdaq Composite Index gained 3 points, or 0.2%, to 1,535. The technology-heavy index jumped 11% for the week and had a monthly loss of 10.8%.
A turning point for the market seemed to start a week ago, with the market gaining more confidence as President-elect Barack Obama began unveiling his economic team. On Wednesday, Obama appointed former Federal Reserve Chairman Paul Volcker to head a newly created White House advisory post. Read details.
"The pool of people the president-elect has chosen has been greeted well," said Ken Tower, market strategist at Quantitative Analysis Service. "Restoring confidence is an important step for the markets and the economy."
Adding to the positive tone, the government stepped in to bailout Citigroup Inc. , which allowed shares of the ailing bank to rebound 120% over the past week after plunging below $4 amid fear about its future.
And continued hopes for a bailout of the U.S. auto industry also helped shares of General Motors Corp.to rebound over 70%.
On Tuesday, GM, Ford Motor Co. , Chrysler and other automakers will post what are again expected to be dismal U.S. sales for the month November.
Over the past week, the Federal Reserve also announced it would spend $800 billion to buy debt in order to lower borrowing costs for consumers and home buyers.
The move helped to send the yields on 10-year government bonds , which are used to benchmark mortgages, below 3% to their lowest level on record. See full story.
"The market is getting the message that we're looking at a stabilization process," said Avalon's Cardillo. "The credit markets are likely to be behaving in a more normal way towards the end of the year."
On Thursday, Fed Chairman Ben Bernanke is also expected to speak on housing at a Fed conference in Washington.
Data, central banks
On Monday, the Institute for Supply Management will release its manufacturing survey for November. Construction spending figures for October will also be released.
Tuesday will feature U.S. auto sales while Wednesday will bring the November ADP employment survey of the private sector, productivity figures for the third quarter and the ISM's November survey of the service sector of the economy.
Also on Wednesday, the Fed is expected to release its Beige Book of economic conditions, which is "likely to paint an even bleaker picture than the October report," as it captured a near seizure in credit markets "and the resulting knock-out punch to consumers and businesses," said Sal Guatieri, senior economist at BMO Capital Markets.
On Thursday will be weekly jobless claims. Federal Reserve Chairman Ben Bernanke is also expected to speak on housing at a Fed conference in Washington.
Also on tap, the European Central Bank and the Bank of England are expected on Thursday to make decisions on interest rates.
Friday will bring the jobs report. BMO Capital expects the economy to have shed 350,000 jobs in November, and the unemployment rate to have risen to 6.8%, from 6.5% in October.
