This week’s news of First time claims for unemployment benefits fall and Congressional Democrats vented their anger at President Obama’s proposed extension of the Bush tax cuts did not adversely affect the markets. Stocks head toward the year end on a tail wind, but traders are watching a number of cross currents that could hold back gains in the week ahead.
Next week, the biggest event for markets are Congress voting on a tax package compromise that would extend Bush’s tax cuts for two years and provide a one-year break on Social Security taxes for individual tax payers. Wall Street has already embraced the plan and has factored in more robust economic growth for 2011, and higher stock prices, because of it. Markets will also be watching Tuesday’s US Federal Reserve meeting, which is not expected to generate any major news. The Fed is expected to leave interest the same and use its post-meeting statement to do little more than restate its flexibility on its controversial quantitative easing program. There is also a full calendar of economic reports, including retail sales, and consumer and producer inflation data.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.