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Market Insider: Pre-Holiday Economic Reports on the Way

Stocks may take a break from their high velocity mood swings as traders wind down for the Thanksgiving holiday.

Wednesday's market though will have to digest plenty of data that will help paint a picture of the fourth quarter. October durable goods orders, personal income and consumer spending, all reported at 8:30 a.m., will all be watched carefully for what they say about the current quarter. Weekly jobless claims is also released at 8:30 a.m.; Chicago purchasing managers at 9:45 a.m., and consumer sentiment is issued at 10 a.m.

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"I think the fourth quarter is horrific. The numbers I think are going to be horrible," said Marc Chandler, chief currency strategist for Brown Brothers. "You're going to see consumption fell and income rose slightly. The important thing is spending fell." Chandler said consumer spending is expected to come in at minus 1 percent after a decline of 0.3 percent last month.

Tuesday's market rose early but gave back gains, before recovering again late in the session. The Dow finished up 36 points at 8480, and the S&P 500 was up 5.58 at 857. Stocks got a boost from new government moves aimed at helping markets for consumer credit and mortgage-backed securities.

The Fed Tuesday said it was implementing $800 billion in new programs. The program would provide, starting in February, $200 billion in nonrecourse loans to holders of asset-backed securities, backed by highly rated consumer and small business loans. The Fed also plans to purchase up to $100 billion in GSE debt starting next week, and it will purchase up to $500 billion in mortgage-backed securities backed by GSEs.

Following the announcement, risk premiums on mortgage bonds and debt issued by Fannie Mae and Freddie Mac tightened significantly as buyers returned to the market.

"There's still a lot of details to be had. At the same time, you have to look at it as a real positive," said Greg Peters, Morgan Stanley global head of fixed income research. "They're going after the consumer securitized market. That's something that's needed, and I think it's a good thing. Conceptually, there's a real boost there."

"This week was a pretty big week. You had clarification over the weekend of the guarantee on the financials. You had the latest TARP version 3.0, coupled with the mortgage program. This is an unambiguous positive," he said.

Peters said the market response was positive. "They faded a little throughout the day, but net net, it's much better for sure," he said.

Financials shares rallied on the news, adding another 2.5 percent gain. T. Rowe Price equity analyst Jason Polun follows banks and says we may finally be seeing the banks balance sheets for what they are, after quarter after quarter of negative surprises. Polun was speaking Tuesday at a T. Rowe outlook briefing for the media.

For banks that are lending, the current environment is great. "Traditionally banks take their customers out to lunch. Now customers are taking their bankers out just so they get their loans," he said. He said one area he is keeping an eye on is commercial real estate loans.

Econorama

Besides the data calendar, traders will be watching the announcement of a stimulus package for Europe, expected at 6:15 a.m. New York time. Also, President-elect Barack Obama holds another presser on the economy at 10:45 a.m.

For the Energy Investor:

The European package is expected to equal about 1 percent of Eurozone GDP, or about $122 billion. "This is the nations signing on to it," said Chandler of the announcement.

The dollar Tuesday fell for a second day, losing 1.26 percent against the euro. "Tomorrow the EU is going to make a stimulus announcement. I do think the U.S. is most proactive on this. As the dollar strengthened, we were saying the U.S. was ahead of the curve and getting rewarded for it," Chandler said.

Chandler said the dollar's move lower is a temporary correction. He said the euro may move above the $1.33 level, possibly to a level of $1.36, before it heads lower again. The dollar today was at $1.3067 per euro.

Oil Drill

Oil lost $3.73 per barrel, or 6.84 percent to $50.77. Traders are once more concerned the economy is hurting demand. Inventory data for oil is released at 10:35 a.m. Wednesday.

Questions? Comments? marketinsider@cnbc.com

  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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  • JeeYeon Park is a writer for CNBC.com. Follow her on Twitter: @JeeYeonParkCNBC

  • Rick Santelli joined CNBC Business News as an on-air editor in 1999, reporting live from the floor of the Chicago Board of Trade.

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