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Market Insider: Thursday Look Ahead

Stocks Thursday will have to traverse weekly jobless claims, productivity data and a bunch of chain stores sales reports ahead of the opening, and any one of those could crimp Wednesday's rally as investors turn their focus back to the U.S. economy.

Hope that China will unveil a new stimulus packageat the National Party Congress Thursday boosted shares around the world Wednesday and drove industrial and commodities-related names higher. Energy stocks were up 4.1 percent, and the materials sector gained 3.8 percent. But early Thursday, China Premier Wen Jiabao promised to boost the economy but did not go so far as to promise a new stimulus package. China also reiterated its 8 percent GDP growth target for 2009.

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The Dow Wednesday rose 149 points, or 2.2 percent to 6875, and S&P 500, up 16 points, or 2.4 percent at 712. "I think this is an overdue rally. The market was oversold," said Peter Costa of Empire Executions. "I think tomorrow if you have a follow through of 150, 200 points on the upside ... that could be significant because that's what people are looking for. Some of the chartists say we're in an oversold condition and a rally could be sustained form here."

Jobless claims and productivity and costs are released at 8:30 a.m. Thursday, and factory orders are reported at 10 a.m. The European Central Bank and Bank of England have rates meetingsand both are expected to cut interest rates ahead of the U.S. opening bell.

In Washington, the White House hosts a health care summit. Rep. Barney Frank holds a 12 p.m. news conference to announce initiatives on financial oversight, anti-predatory lending, mortgage reform and credit card reform.

The Senate Banking Committee holds a hearing on AIG. Treasury Secretary Timothy Geithner testifies for a third day on President Obama's 2010 budget, this time before the House Budget Committee. Vice president Joe Biden addresses the AFL-CIO executive council in Miami.

Chain Stores Reports

Chain stores release February sales, and many will be out ahead of the opening bell.

Erin Armendinger, managing director of the Jay H. Baker Retailing Initiative at Wharton School, said she does not anticipate any good news in the February reports.
"Transactions are not that far down. It's what people are buying," she said.

"I can't think of any retailer that's just getting people in the door, no problem. Traffic is down and people are not thinking about shopping," she said. She said some retailers are still discounting heavily, and the ones that will do better have already worked through excess merchandise.

"Did the discounting go too far? Did it affect the psyche of the buyers? I think full price is not in their vocabulary anymore," she said. Stores have less inventory now, she added. "The more this goes on, the more supply and demand will match. I think consumers have shifted a little too. Consumers are looking for that value proposition. They're looking at what the exchange is. What they're getting in return of their money."

Stocks to Watch

Automakers will be in focus as GM bond holders meet with the White House auto task force, and investors assess the damage to Ford's stock after its late day announcement Wednesday. Ford said it would cut its $25.8 billion in debt by about 40 percent by offering creditors cash and new shares.

Also, General Electric shares could remain in the spotlight. GE continued to act as a damper on the market, falling 4.6 percent Wednesday for a 26 percent decline in four days. GE has lost more than 58 percent or $95 billion in market share this year. GE again tried to reassure investors with a letter to investors Wednesday morning.

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"Recently claims have been made that GE will be required to raise new capital near term. This is pure speculation, is inaccurate and is not based on any input from our company," GE said in a letter to investors. "GE has acted aggressively during the current global economic crisis to strengthen our capital base and significantly increase sources of liquidity at GE Capital." GE owns NBC Universal, the parent of CNBC.

Questions? Comments? marketinsider@cnbc.com

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  • Patti Domm

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

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