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Sun, Nov 26, 2006 - Page 10 News List

Dow struggles while NASDAQ edges up

`CYBER-MONDAY' At the end of a shortened trading week, analysts were casual about the Dow giving up some gains as they monitored the pre-Christmas shopping season


The major US indexes closed out the shortened trading week mixed on Friday, with the blue chip Dow Jones index losing ground as the technology-laden NASDAQ index notched up gains.

In the week to Friday, the Dow Jones Industrial Average blue-chip index fell 2.21 percent to 12,280.17.

The broad-market Standard & Poor's 500 lost 0.02 percent to 1,400.95 while the tech-weighted NASDAQ climbed 0.46 percent to 2,460.26.

Traders said they were not surprised the Dow gave up some gains as the markets were shut Thursday for the Thanksgiving public holiday and only traded half a day on Friday.

They said the stock indexes still remain at robust levels, especially the Dow, which has chalked up a series of record closing highs in recent weeks.

Analysts said they were eager to see what consumer demand would be like on Friday as the critical pre-Christmas shopping season began. Many large department stores opened around dawn across the US on Friday as retailers launched big Thanksgiving holiday sales in a bid to lure consumers to part with cash for discounted electronics, clothing and furniture.

Analysts track the retail sector closely as consumer spending accounts for some two-thirds of all US economic activity.

"The biggest news is going to be those Friday sales," said Marc Pado, an analyst at Cantor Fitzgerald.

"Even though there is a lot of economic news next week, I think the performance in terms of retail sales over the weekend is going to probably be the highlight for the early part of the [coming] week," Pado said.

Other market-watchers agreed that investors would be focused on the weekend sales figures early next week.

"Traders will be anticipating the outcome of `Black Friday' and `Cyber-Monday,' typically the heaviest shopping days of the year," said Frederic Dickson, a senior strategist for DA Davidson and Co, referring to Friday's sales events and tomorrow, when many consumers are expected to make online purchases.

Analysts said they will be tracking the retail sales figures closely because the US economy has cooled markedly this year on the back of a housing slowdown, record oil prices and higher interest rates.

However, oil prices have fallen sharply from summer highs in recent months and the Federal Reserve has kept interest rates on hold since August.

The coming week will seek a slew of announcements on the economy that will likely drive trading. Fresh updates on existing and new homes sales, consumer sentiment, personal income and spending and auto sales are all due to be released through the week, as well as reports on construction spending and a preliminary reading for third-quarter GDP.

Most analysts expect new home sales for last month to moderate to 1.045 million units, compared with 1.075 million in September as the housing downturn continues.

Existing homes sales, however, are expected to rise to 6.2 million units last month, compared with 6.18 million in the prior month, according to most economists.

Auto sales by the big manufacturers across the country are forecast to rise to 5.2 million units this month from 5.1 million last month.

Personal spending is expected to remain steady, with a predicted rise of 0.1 percent last month compared with September, according to most economists' estimates.

And the government's preliminary GDP reading is anticipated to be revised higher to 1.8 percent, from an initial reading of 1.6 percent.

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