Tomorrow's report by the Lanor Department is expected to show the consumer price index inching forward for the month by 0.4 percent. That would be a far better showing than the giant leaps of 0.8, 0.8 and 0.6 percent of the least three months, but still enough to give the Federal Reserve plenty of cause for concern.
"There will probably be a fairly strong school of thought at the [Federal Reserve] meeting that they've [consumer prices] eased quite a bit and it might be good to take a breath," says David Jones, chief economist at Aubrey G. Lanston & Co.
One reason the Fed may choose to act quickly is the trend of salaries and wages. Samuel Kahan, chief economist of Fuji Securities Inc. of Chicago, says they are headed lower, resulting in "a significant downshift in the rate of consumer price inflation in coming months."
The nation's trade deficit for October will be reported tomorrow, with analysts predicting it could hit $10 billion, up from $9.41 billion in September. Imports of oil and consumer goods are believed to have risen during the month, with exports flat.
The Mortgage Bankers Association of America tomorrow releases its delinquency survey and end-of-year economic outlook. Also tomorrow, the Labor Department reports real earnings for November.
The Commerce Department Wednesday reports housing starts for November and its revised gross national product for the third quarter, previously reported as an annual growth rate of 1.7 percent. Commerce Thursday reports November personal income.
The Dow Jones industrial average finished 3.71 points higher last week at 2593.81. The market finished on a downbeat, however, as the index lost 20.55 points Friday.
Although many Wall Streeters believe the market "bottomed out" on Oct. 11 at a Dow close of 2365.10, others aren't so sure. Veteran technician Richard Russell, publisher of Dow Theory Letters in La Jolla, Calif., notes that the Dow lost about 635 points from its all-time high in July to the October low, but that it has managed to retrace less than half that plunge. An exact 50 percent rebound would place the Dow at 2682.42, says Russell, adding, "So far, it's a substandard performance."