- The Washington Times - Sunday, June 19, 2005

NEW YORK — The stock market has proved to be downright scrappy, with investors still bidding stocks higher last week as crude oil prices topped $58 per barrel and the nation’s economic picture remained muddled.

But investors’ tenacity could be sorely tested this week, not because of a big economic report or a swath of earnings results. It’s because there is so little information due out this week for investors to use in making their trading decisions, which means would-be buyers may not have enough reason, or confidence, to push stocks any higher.

The market’s bias is positive, at least for the moment. With last week’s economic data pointing to a slowing — but not crashing — economy, investors have a glass-half-full mentality. They are latching onto positives, such as a low risk of inflation and the likelihood that the Federal Reserve will soon be able to stop raising interest rates, and they are ignoring the negatives, which include a tepid labor market and surging oil prices.

This week, however, little economic data will be released and only a few major companies are reporting earnings. With little to support higher prices, it will be difficult for investors to resist the temptation to lock in profits, then sit back and wait for the end of the quarter and the upcoming surge in second-quarter earnings reports.

Last week, a series of modest gains evolved into a decent five-day rally as investors embraced the lower risk of inflation. For the week, the Dow Jones Industrial Average gained 1.05 percent, the Standard & Poor’s 500 was up 1.57 percent, and the Nasdaq Composite Index climbed 1.31 percent.

The Conference Board’s index of leading economic indicators, scheduled for release today, is a compilation of other recent economic data that, ideally, points toward future trends. Although the index often is criticized on Wall Street for its lack of predictive qualities, a sharp swing in an otherwise light news week could move stocks. The index is expected to lose 0.3 percent in May, which signals slower economic growth. The index lost 0.2 percent in April.

A much better economic indicator comes Friday, when the Commerce Department reports May’s orders for durable goods, defined as generally big-ticket items designed to last at least three years. Durable goods orders are expected to rise 1 percent, off from a 1.9 percent rise in April. Some economists, however, think there is a good chance for orders to come in higher than the Wall Street consensus, and that could help stocks if they are correct.

The most-watched earnings report scheduled this week undoubtedly will be that of Morgan Stanley, which is due to report Wednesday before the trading session starts.

Last week, Chief Executive Phil Purcell announced his upcoming retirement, the company warned that its earnings would be lower than expected, and news reports said the company’s spinoff of its Discover card division is in question. The company is expected to earn 91 cents per share, down from $1.16 per share in the second quarter a year ago.

The embattled Wall Street firm’s troubles have sent the stock tumbling 15 percent from its 52-week high of $60.51 on Feb. 14. Morgan Stanley closed Friday at $51.38.

On Thursday, FedEx Corp. will report its fourth-quarter earnings, expected to come in at $1.49 per share, up from $1.33 per share last year. With fuel costs rising for its fleet of trucks and aircraft, the shipper’s shares are off 14.3 percent from its 52-week high of $101.87 on March 7, closing Friday at $87.32.

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