NEW YORK (Reuters) - Extending Friday's rally into next week is a tall order for U.S. stocks, given more data set to show the job market and retail sector are in deep distress and little hope for a respite from dismal corporate outlooks.
Uncertainty about the fate of ailing U.S. automakers is another big wild card. U.S. lawmakers could start debate on whether and how to rescue GM, Ford and Chrysler as early as Monday, with no clear visibility on a likely outcome.
More headwinds are due late in the week from a spate of key economic reports.
On Thursday, the U.S. Labor Department is likely to say first-time claims for unemployment benefits held above the 500,000 level for a fourth straight week. Then on Friday, the Commerce Department is expected to report that retail sales fell in November for the fifth month in a row, the longest streak of monthly declines since the government started tracking the data in 1992.
"There's no place to hide," said Eric Kuby, chief investment officer, North Star Investment Management Corp in Chicago. "It's clear that the economy is really soft for the next few months at least. The news will continue to be bad and everyone knows that."
Wall Street ended on a decidedly upbeat note on Friday, but major U.S. indexes still fell for the week, amid a slew of negative economic data that underscored fears that the economic malaise has reached nearly every sector.
For the week, the Dow Jones industrial average .DJI slid 2.2 percent, while the Standard & Poor's 500 .SPX dropped 2.3 percent and the Nasdaq Composite Index .IXIC shed 1.7 percent.
With just a few weeks left in the year, the Dow is down 34.9 percent for 2008, while the S&P 500 is off 40.3 percent and the Nasdaq is down 43 percent.
THROW OUT THE CRYSTAL BALL
A host of U.S. companies trimmed their financial outlooks this week, including blue-chip drugmaker Merck & Co Inc (MRK.N: Quote, Profile, Research, Stock Buzz) and chemical maker DuPont (DD.N: Quote, Profile, Research, Stock Buzz). Analysts expect there will be more to come.
"I keep hearing conference call after conference call -- we can't provide any more forecasts," Kuby said. "You're going to hear more of them say it's worse than we thought or we can't stick by our guidance anymore."
Not even a Detroit bailout may provide the ammunition for a sustainable rally, analysts said.
"Ultimately, it is likely there will be some kind of package," said Doug Roberts, chief investment strategist at Channel Capital Research in Shrewsbury, New Jersey. But, at best, the measure would be a "Band-Aid."
Only a handful of S&P 500 companies are expected to post earnings next week, including tax-preparation firm H&R Block Inc (HRB.N: Quote, Profile, Research, Stock Buzz) and National Semiconductor Corp (
