Welcome to autumn—the time of year when the leaves are crispy, traders and Wall Street players are back to their desks and trading volumes begin to pick up. This is a seasonally strong time of year and the return of buying pressure means that we see a pick-up in interest in small- and mid-cap stocks.
This is a great time to be a stock picker, but of course that’s not to say we can ignore the broader economy. So here’s what we should be looking ahead to this week:
On Tuesday, we have the Consumer Confidence Report. The Conference Board will release its monthly survey to determine the level of consumer confidence. The report is interesting as it may predict shifts in consumption patterns and is a further indication of how consumers are feeling about the overall economic picture.
Then on Wednesday we get some more data from the housing market. The Commerce Department will release its New Home Sales report that indicates the level of new privately owned single-family houses sold and for sale for August. In addition to new home sales, the market monitors the number of homes for sale relative to the current sales pace.
On Thursday, the pace starts to pick up—the Labor Department produces its Initial Claims for Unemployment report that details initial jobless applications and provides an indicator of the direction of the economy, with increases or decreases in claims that signal slowing or accelerating job growth.
In addition, the Commerce Department will release its Durable Goods Orders report that details dollar volume of orders, shipments and unfilled orders of durable goods—items with an intended lifespan of more than three years. Orders for durable goods are an excellent indicator of manufacturing activity and it is likely that the stock market will move on this report.
The other market-moving report is that the Commerce Department will release its third estimate for Gross Domestic Product numbers for the economy for the second quarter of 2012. This is the broadest measure of economic activity and consumer spending is by far the largest component, totaling roughly two-thirds of GDP.
The news about the American consumer will continue on Friday, as the Commerce Department releases its report on Personal Income and the University of Michigan releases its Consumer Sentiment Index. Both of these reports have been increasingly influential on Wall Street as of late, and I’ll be watching both closely.