March 14, 2006 > Despite the ups and downs, stocks are stuck in a rut

by MICHAEL J. MARTINEZ, AP Business Writer

NEW YORK (AP), March 11 _ Friday's surge in stock prices was very welcome for investors who feared that concerns over interest rates and the economy could send the markets substantially lower ahead of the Federal Reserve's meeting at the end of March.

However, Wall Street remained stuck in a relatively narrow trading range _ a frustrating result for investors eager to realize gains.

To see how stocks have fared over the last three weeks, here are how the major indexes finished Friday, compared with how they finished on Feb. 21: the Dow Jones industrials finished at 11,076.34, up 7.28; the Standard & Poor's 500 index was at 1,281.58, down 1.46; and the Nasdaq composite index closed at 2,262.04, down just 0.92 from nearly three weeks ago.

That's 14 trading days in which the major indexes ultimately moved just 0.1 percent or less. In between, the market traded erratically in both directions, as investors reacted strongly to each piece of economic data, each earnings report and each utterance from a Fed president. Given that those signals have yielded a mixed view on the economy, it's unsurprising that, at the end, stocks are little changed.

There are a handful of events this week that have an outside chance of moving stocks. Three major brokerage houses _ Goldman Sachs Group Inc., Bear Stearns Cos. and Lehman Brothers Holdings Inc. _ are scheduled to report their first-quarter earnings. With their close ties to the markets, their earnings reports could provide insight into the state of the economy.

And on Thursday, the Labor Department will release the Consumer Price Index, which is perhaps the best measure of whether there are any inflation pressures in the economy.

If any of those pictures are muddled, however, investors may have to wait for the Fed to sort things out at the end of the month.

Last week, stocks drifted lower in erratic trading until Labor's job creation report prompted a decent rally on Friday. For the week, the Dow rose 0.5 percent, while the S&P fell 0.44 percent and the Nasdaq dropped 1.76 percent.

ECONOMIC DATA

Most of the government reports this week are relatively minor, but by Thursday, all eyes will be on the CPI report. Economists expect overall consumer prices to have risen just 0.1 percent in February, after a 0.7 percent jump in January. So-called ``core'' CPI, with food and fuel prices removed, is expected to have risen 0.2 percent, on par with January.

With such low projections, it's unlikely that these reports will be better than economists expect. However, there's a chance that prices could have risen more than predicted, and higher CPI numbers would very likely send stocks lower.

On Friday, the University of Michigan releases its widely watched consumer sentiment index. The preliminary reading for March is expected to come in at 89.5, up from February's 86.7 reading.

EARNINGS

Of the major brokerage houses, Goldman Sachs has emerged as, arguably, the top investment bank on Wall Street today, and that sentiment can be seen in its stock price, which has risen 49 percent from its 52-week low of $94.75 on May 31, 2005, to close Friday at $141.53. Goldman Sachs is expected to earn $3.32 per share, up from $2.94 per share in the first quarter of 2005, when it reports its earnings before Tuesday's trading session.

Among other companies reporting earnings in the week ahead, Borders Group Inc. could give investors a read on the retail sector. The bookstore chain is expected to post earnings of $1.76 per share, up from $1.67 per share a year ago, when it releases its results late Thursday. The stock has rallied 30 percent from its 52-week low of $18.65 on Oct. 28 to close Friday at $24.26.