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wall st week ahead

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    NEW YORK, Feb 22 (Reuters) - U.S. stocks will face a
    heavy lineup of economic indicators next week and may come
    under pressure if any of the datapoints signal that the United
    States is in or headed into a recession.

    The housing market, which is at the center of the economic
    slowdown, will get particular attention next week. Monday's
    existing home sales report will be followed by the
    S&P/Case-Shiller Home Indexes on Tuesday. New home sales are
    set for release on Wednesday, the same day luxury home builder
    Toll Brothers Inc reports quarterly results.

    Freddie Mac is set to release its earnings on
    Thursday. Merrill Lynch cut its ratings on Freddie Mac and
    Fannie Mae on Friday to "neutral" from "sell," writing
    that the market is not braced for the companies to report
    "significant losses" on their fourth-quarter results.

    "With housing numbers coming out, it's not a good thing in
    this market, given that they always seem to disappoint," said
    Owen Fitzpatrick, head of the U.S. Equity Group at Deutsche
    Bank Private Wealth Management, in New York. "Data just keeps
    pointing to the economy slowing. I think the market has to
    adjust expectations about earnings. They're definitely still
    too high and need to come down."

    Other data on tap include several price indexes and
    growth indicators, which are key to determining whether the
    Federal Reserve will keep cutting interest rates as it seeks
    to stimulate the economy. Thursday will bring an updated
    report on fourth-quarter gross domestic product. And since
    2008 is a leap year, February wraps up on Friday with an extra
    day. The agenda for Feb. 29 is heavy, with reports due on
    January personal income and spending, the Chicago Purchasing
    Managers Index for February and the final reading for February
    on the Reuters/University of Michigan consumer sentiment


    A jump in crude oil futures above $101 a barrel and a
    higher-than-expected reading on January consumer prices
    earlier in the week stirred fears that the Fed may be backed
    into a corner, having to choose between fostering growth or
    slowing down inflation.

    The January reading on the Producer Price Index, set for
    release on Tuesday, will shed further light on the state of
    inflation. November and December PPI readings were revised
    lower on Friday on a recalculation of seasonal adjustments,
    but unadjusted data showed wholesale prices on a sharp
    ascending trend, with overall producer prices rising in 2007
    year on year by the most since 1981.

    Whether the Fed will continue to focus first on
    stimulating growth may become more clear on Wednesday and
    Thursday when Chairman Ben Bernanke gives his semiannual
    testimony to congressional committees on Wednesday and
    Thursday. Dallas Fed President Richard Fisher said on Friday
    that policy-makers were faced with a "dilemma" of creating
    conditions for employment growth without stirring "the embers
    of inflation."

    Outside of scheduled releases, investors will tune in for
    any further developments related to the subprime mortgage


    Wall Street will take the pulse of consumer spending with
    more than a half dozen S&P 500 retailers set to report
    quarterly results next week.

    Upscale department store chain Nordstrom kicks off
    the earnings parade on Monday followed by RadioShack Corp
    , Target Corp , Macy's Inc , Home Depot Inc
    and Office Depot Inc , all on Tuesday. Clothing
    chain Gap Inc reports earnings on Thursday.

    In a sign of the equity market's continued sensitivity
    to subprime-related news, the Dow and the S&P 500 erased deep
    losses and rallied late in the session on Friday on a report
    that bond insurer Ambac Financial Group Inc could get
    a bank bailout by Monday or Tuesday. Ambac is facing billions
    of dollars of expected losses after insuring bonds liked to
    subprime debt and other risky assets.

    Friday's rebound lifted both the Dow and the S&P 500 for
    the week, but all three indexes remained in negative territory
    for the year. For the week, the Dow gained 0.3 percent and the
    S&P 500 advanced 0.2 percent, while the Nasdaq slid 0.8

    For the year so far, though, the Dow is down 6.7 percent,
    the S&P 500 is off 7.9 percent and the Nasdaq is down 13.2

    "What's going to continue to drive the markets are the
    anecdotal-like news coming from financial institutions on
    problems with all these synthetic securities that have been
    developed by Wall Street," said Hugh Johnson, chief investment
    officer of Johnson Illington Advisors in Albany. "We're still
    in the process of determining the extent of the damages to
    financial firms."

    American International Group is one of the
    companies being eyed by Wall Street for signs of any more
    mortgage-related losses. The world's largest insurer is set to
    release results on Thursday. AIG said earlier this month that
    the size of any write-down from derivative losses was not
    expected to be material to the company.

    The spread of the subprime mortgage crisis into other
    assets will be closely monitored by Wall Street. Relatively
    obscure auction rate securities were the latest market to
    suffer a meltdown as liquidity all but evaporated this week.

    "The question is: Have the credit markets stabilized? If
    they have, equity investors should be feeling better. If the
    credit markets deteriorate, we may find the recent pullback in
    the stock market may extend 3 (percent) to 4 percent," said
    Fred Dickson, market strategist and director of retail
    research at D.A. Davidson & Co., in Lake Oswego, Oregon.

    "Equity investors are looking over their shoulders at the
    credit market much more closely than people realize."
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