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October 24, 2006 > Investors await more earnings, Fed news following record-setting

Investors await more earnings, Fed news following record-setting

by Tim Paradis

NEW YORK (AP), Oct 20 _ After another record-setting week in which the Dow Jones industrial average closed above 12,000 for the first time, investors will sift through another heavy flow of earnings reports and key economic data in hopes of determining whether the market's run-up will continue.

Much of the economic discussion will focus on the Federal Reserve, which begins a two-day meeting Tuesday. Though the central bank is expected to leave short-term interest rates unchanged, investors will be eager to obtain the Fed's latest assessment of the economy.

The rally in stocks in the third quarter and this month has occurred in part because recessionary concerns have given way to a sense that the cooling economy is headed for a soft landing. Some investors had questioned whether the Fed reached too far in its push to contain inflation when it raised interest rates 17 straight times over two years before pausing in August.

Beyond the Fed meeting, investors expect to receive data on home sales and on the nation's gross domestic product, the broadest measure of the economy.

Big-name earnings are likely to hold sway over sentiment as they did last week when International Business Machines Corp.'s profit report first pushed the Dow past 12,000. The Dow ended the week up 0.35 percent, while the Standard & Poors 500 index was up 0.22 percent and the Nasdaq composite index was down 0.64 percent. In the coming week, investors expect to hear from American Express Co., DuPont Co. and Microsoft Corp.

Other forces could affect the markets. Oil prices hit a low for the year Friday amid skepticism about whether OPEC would implement the production cut it approved. Also, tensions with North Korea over its nuclear ambitions could heat up.

ECONOMY

On Wednesday, the Fed is expected to offer its read on the economy following its meeting. Also that day, the National Association of Retailers is set to release data on sales of existing homes in September. The health of the housing sector remains a concern as investors try to determine whether a slowdown will dent growth elsewhere in the economy. Weekly data on crude inventories are also due Wednesday.

On Thursday, the Commerce Department plans to release a report on durable goods orders, which will provide a look at the health of the manufacturing sector. The department's report on new home sales is also expected that day.

On Friday, the Commerce Department plans to release its advance reading for third-quarter gross domestic product growth. Economists are expecting GDP will show an increase of 2.2 percent.

Investors also expect to gain insight into the mood of consumers Friday with the release of the University of Michigan's revised consumer sentiment figure. Lower gas prices helped push the preliminary October figure, released earlier this month, to 92.3 from a reading of 85.4 for September.

EARNINGS

On Monday, investors expect a third-quarter report from American Express, which is expected to earn 76 cents per share. The credit card company, which has traded between $46.59 and $58.43 in the past 52 weeks, closed Friday at $58.04.

Also due that day is a report from Ford Motor Co., which is expected to post a loss of 61 cents per share. While the troubles of the No. 2 U.S. automaker and its domestic rivals have been well-documented, investors will be awaiting word on the company's progress in stanching losses. Ford closed Friday at $8.01; its stock has traded between $6.06 and $9.48 in the past 52 weeks.

DuPont, the chemical maker, also plans to report third-quarter results Tuesday and is seen earning 45 cents per share for the third quarter. The stock closed Friday at $44.97 and has traded between $38.52 and $45.75 in the past 52 weeks.

On Wednesday, aerospace company Boeing Co. is expected to report a third-quarter profit of 63 cents per share. The stock, which has traded between $63.70 and $89.58, closed Friday at $81.74.

Also that day is a report from ConocoPhillips. Wall Street expects the company will earn $2.40 per share for the third quarter. The stock has traded from $54.90 to $72.50 in the past 52 weeks and it ended Friday at $60.86.

Thursday brings a fiscal first-quarter report from Microsoft; analysts expect the software maker to earn 31 cents a share. Its stock closed at $28.43 Friday and has traded between $21.46 and $28.70 in the previous 52 weeks.

 
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