The main theme for economic reports next week will be U.S. housing market conditions.
NEW YORK (TheStreet) -- The theme for economic reports next week will be U.S. housing market conditions.
On Monday, the National Association of Home Builders' housing market index for March is expected to come in at a reading of 30, up from the prior month's 29, according to a survey of economists by Thomson Reuters.
On Tuesday, the Commerce Department is expected to report that February housing starts fell to 697,000 from 699,000 the previous month. The Bureau is also expected to report that building permits for February came in at 680,000, rising from 676,000 in January.
On Wednesday, the National Association of Realtors is expected by economists polled by Thomson Reuters to say that existing home sales rose to an annual rate of 4.61 million in February, from 4.57 million the preceding month. Also, coming out that day is the reading for the Mortgage Bankers Association's mortgage index for the week ended March 17. Estimates were not yet out at the time of this writing. The previous week showed a decline of 2.4%.
On Thursday, the print for the Federal Housing Finance Agency housing price index for January will be released, though estimates were not yet out at the time of this writing. December registered a jump of 0.7%.
The week's housing data dump will finish up on Friday. The Census Bureau is expected to say that new single-family homes in the U.S. sold at a 325,000 annual rate in February, up from 321,000 previously.
"Basically, the market will want to see affirmation that the U.S. continues to slowly grow its way out of the Great Recession," says Luminous Capital partner Alan Zafran.
"Given the move in the housing market stocks and the generally improving sentiment overtaking the sector, the broad data points will be watched closely for signs the improvement is continuing," said Dan Greenhaus, chief global strategist at BTIG.
Next week, says Michael Gayed, chief investment strategist at Pension Partners, will be an important one given the substantial move higher in Treasury bond yields this week.
The move in bonds, Gayed points out, coincides with the bank stress test results of Tuesday and dividend increases by major banks. "If bonds do not recover after the big drop in price and spike in yields shortly, it would suggest that the fever has broken in bonds," he said.
"Any kind of economic data which reinforces inflation expectations will only further the case for stocks in the near-term as reflation continues to be believed by investors," he added.
All that said, the market's tail end chasing of late and continued short-term vision should allow equities to continue spinning in a positive direction the coming week.
"I think there are certain times where you have a temporary mood swing," says Jeffrey Sica, manager of SICA Wealth Management. "You look at the psychology of the market and there comes a point where the markets will just opt to completely ignore things like the European debt crisis, which is on the back burner right now ... and the economic reports are coming out okay too."
"Economists are taught to look ahead and over horizon. But we have a market that doesn't look over the horizon -- it lives for the moment, and that's bipolar. Right now the market is happy."
"I think the mood will continue," Sica continues. "The market is focused on themes -- and the mantra right now is that the economy is improving."
This week, equities broke historical milestones, with the Dow on Tuesday settling above 13,000 and the Nasdaq above 3000 for the first time the same day. The Nasdaq hadn't closed above this level in more than a decade.
Furthermore, on Thursday, the S&P 500 finished above 1400 for the first time since June 2008.
"This is an ignorance is bliss market," says Sica. "As long as they don't have to look at negative headlines ... as long as it's not on TV, investors are mostly okay."
Underneath the recent euphoria though, has been, as Sica describes it, "horrendously" low volumes that tell a very different story. In the broader picture, investor enthusiasm and buying conviction have been low.
"If there's an event that comes out of the blue ... gravity will take effect," warns Sica of the inevitability of negative news headlines striking again.
Sica is bearish about the economy, pointing to the lack of overwhelming enthusiasm about the economy in the latest statements out of the U.S. Federal Reserve. "Fed Chairman Ben Bernanke," he remarks, "wasn't doing backflips over the economy."
Other economic reports coming out next week include the Labor Department's weekly initial jobless claims report on Thursday for the week ended March 17, which is expected to remain unchanged at 351,000. Also on Thursday, the Conference Board's leading indicators report is likely to show a rise of 0.6% after a climb of 0.4% in January according to economists.
A handful of prominent companies releasing earnings next week including Adobe Systems(:ADBE), Oracle(:ORCL), General Mills(:GIS), FedEx(:FDX) and Nike(:NKE). "Investors will look to see how these companies anticipate maintaining their high profit margins in a world where commodity prices are rising and labor wage pressures may soon surface," says Zafran.
"Looking ahead to the coming week, the release of Apple's(:AAPL) newest iPad will likely have a significant effect on the short-term direction of the technology sector," Zafran adds.
Other important earnings will come from Darden Restaurants(:DRI), Tiffany(:TIF), Fidelity National Information Services(:FIS), Micron(:MU), Dollar General(:DG) and KB Home(:KBH).
-- Written by Andrea Tse in New York.
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