Stocks could sputter with Black Friday eyed

Data has largely shown an economy that is recovering slowly but is still weak in areas like employment.

NEW YORK: US stocks could sputter this week as volumes dry up in holiday-shortened trading and with a slew of economic reports likely to illustrate the recovery is still fragile.

Investors will also get a glimpse of how holiday shopping could shape up with Black Friday, which traditionally marks the start of the season as retailers slash prices to tempt shoppers. It will be difficult for the economic recovery to make much headway without a pick-up in consumer spending as it accounts for two-thirds of the economy.

A raft of data is squeezed into the first half of the week, shortened by Thursday's Thanksgiving holiday. The delicate nature of the recovery has analysts split on whether the economy will advance from here or still faces another leg down.
The debate has plagued the rally throughout its run but now that the S&P 500 is up more than 60 per cent from March's 12-year lows, investors are more wary of taking risks. With just six trading weeks left in the year, market watchers are keen to hold onto profits.

Data has largely shown an economy that is recovering slowly but is still weak, particularly in areas like employment. Reports include home sales, consumer confidence, durable goods and the second reading of gross domestic product.
As well, the Federal Open Market Committee will release the minutes from November's rate-setting meeting. Investors will be looking for insight as to how the central bank will eventually start to remove its extraordinary stimulus measures and its view on the health of the economy.

The Dow and S&P 500 made 13-month highs last week before easing off, and recent sessions suggest the market is struggling to justify more gains.

For the week, the Dow rose 0.5 per cent, the S&P 500 fell 0.2 per cent and the Nasdaq shed 1 per cent. The S&P failed to hold above the key 1,100 level and will continue to face resistance there.

Volume is expected to be light throughout the week with US markets closed on Thursday for Thanksgiving and shutting early on Friday. Low volume can make stocks more volatile as fewer participants make it easier to move prices.

Black Friday, the day after Thanksgiving, will be watched closely with analysts anxious for signs consumers will be opening up their wallets. The phrase Black Friday is used by retailers to refer to the start of the holiday period when their business moves into the black, or turns a profit.

Early data on shopper traffic and anecdotal evidence will give the first snapshot of the day's performance and a clearer picture will emerge the following week when stores report November retail sales.

Third quarter preliminary gross domestic product is expected to come in at 2.9 per cent, revised down from an advance reading of 3.5 per cent last month, according to Reuters data. Analysts have been scaling back expectations for economic growth after data last week showed a larger-than-expected trade deficit.

Weekly initial claims for jobless benefits will be released on Wednesday, a day earlier than usual. Analysts expect first time claims to dip slightly to 500,000.
Likewise, the FOMC minutes will be released on Tuesday, a day earlier than previously scheduled. Other data includes new and existing home sales, consumer confidence for November and durable goods for October.