Economic Data Coming: What Will It All Mean?
Believe it or not, Microsoft's Vista isn’t the only story making headlines this week. There is a slew of economic data due out including the GDP report (Wednesday), employment numbers (Friday), and a Fed decision (they're meeting Tuesday and Wednesday). So how will this data drive the market this week and into the weeks ahead? Lincoln Anderson of LPL Financial Services and Drew Matus of Lehman Brothers were on “Closing Bell” to give their predictions.
Matus, like most analysts, doesn’t expect any change to come out of this week’s Fed meeting. At the same time, he suspects that the Fed doesn’t want the market to think it’s about to “pull the trigger” on a series of rate hikes. This week’s reports should also show that the U.S. economy is growing into the first quarter. The labor market is in good shape and the GDP will show ’06 ended strong, Matus says. He also expects that inflation numbers will be high enough to keep the Fed nervous, but not enough to make them worry enough to call for a change in interest rates.
Anderson agrees that the GDP report--for the fourth quarter--will show acceleration, and he believes inflation is slowing. He says the market is ripe for investments in large cap growth stocks. Specifically, Anderson likes technology, healthcare and financials. He also believes the U.S. dollar has hit a bottom, so he’s hesitant to invest overseas. As far as the Fed is concerned – Anderson says a “do-nothing Fed” is always the best scenario for equities.