The stock market starts December on a burst of economic news that may distract investors from Europe's sovereign debt worries.
The market closed out November with its first monthly loss since August. Stocks Tuesday were dragged down by European debt concerns, but they shook off much of their losses by the closing bell. For the month, the Dow was down 1 percent at 11,006, theS&P 500 lost 0.2 percent to 1180, and the Nasdaq fell 0.4 percent to 2498.
The dollar gained more than a percent against the euro Tuesday, and was up 7.2 percent for the month of November, its biggest gain since May. The dollar also rose 4 percent against the yen for the month. Treasury pricesrose Tuesday, lowering the yield on the 10-year to 2.795 percent, its lowest level in a week.
What to Watch
Wednesday is significant in that it is the deadline for the Federal Reserve to comply with a mandate in the Dodd-Frank financial reform bill, requiring the Fed to disclose which institutions borrowed what and when from the central bank during the financial crisis.
The day's data includes ADP private payrolls at 8:15 a.m., and productivity and costs at 8:30 a.m. The big one will be the ISM manufacturing survey for November at 10 a.m. Construction spending is also at 10 a.m., and the Fed releases the beige book on economic activity at 2 p.m.
Citigroup economist Steve Wieting expects ISM of 54, down from October's 56.9. "We had seen remarkable upside in the month of October, which we think is difficult to sustain," he said.
"Manufacturing has done the snap back act, but we do think that's in a slowing phase now, and the sequential build in inventories is likely to keep manufacturing no faster than final sales in the United States," he said.
Despite the expected dip in ISM, Wieting sees the economy as improving and this week raised his forecast for 2011 GDP to 2.5 percent from 2.2 percent. He also raised his expectation for the fourth quarter to show a 3.1 percent year-over- year gain, up from 2.9 percent.
Wieitng said the U.S. consumer is helping, and the pickup in holiday spending is a good sign. "The consumer has been gradually picking up. It hasn't gone through the boom and the bust in manufacturing readings," he said. "...spending has gradually been gaining strength A 2.8 percent growth in consumption expenditures picking up from the past year is pretty good."
Consumer confidence, reported Tuesday, was 54.1, its best level in five months.
Wieting does not expect the European sovereign debt issues to drag down the U.S. "Sovereign credit problems in the developed world are going to be with us as far as the eye can see. They are going to be episodic. There are going to be policy steps taken to alleviate these problems. It's going to be difficult to see how the Europe periphery is going to sink the global economy when it's not sinking the euro area yet," he said.
Car sales for November are also reported throughout the day Wednesday and are expected to show an annual selling rate of more than 12 million vehicles.
The presidential bipartisan deficit commission also delivers its controversial, final report on cost-cutting Wednesday, but it may not vote on it until Friday.
Several Fed speakers are about, including Fed Vice Chair Janet Yellen, who speaks at 9:10 in New York on fiscal responsibility and global rebalancing.
Fed Gov. Daniel Tarullo testifies at 9:30 a.m. before the Senate banking committee on problems in mortgage servicing. Dallas Fed President Richard Fisher speaks at 1 p.m. on Fed operations and economic updates.
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