Wall Street jittery heading into 2008
Updated: 2007-12-31 21:01
NEW YORK - As 2007 comes to a close, Wall Street is almost as jittery as it was over the summer, when worries about the housing slump and banks' losing bets on mortgages first came to a head.
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 Traders work on the floor at the New York Stock Exchange. US stocks enter a new year next week on a cautious note, as investors face rising concerns about the economy and a raft of economic data, including the important monthly employment report. [Agencies] |
Investors know more now about how much exposure financial institutions have to bad loans - quite a lot - but they remain uncertain about how the credit crisis of 2007 will hurt the economy in 2008. Market participants will be paying close attention to this week's economic data, particularly the monthly report on employment, seen as the most important factor in preventing housing woes from crippling consumers.
Last week, the Dow Jones industrial average ended 0.63 percent lower, the Standard & Poor's 500 index finished down 0.40 percent, and the Nasdaq composite index fell 0.65 percent.
The three major indexes will finish the year with gains, barring any extraordinary drops Monday, but problems with credit, housing and the financial sector are likely to keep Wall Street nervous at least early on in 2008.
It's been a dismal fourth quarter for the stock market, and the "Santa Claus rally" Wall Street often launches at the end of every year failed to gain steam. The Dow has fallen 3.8 percent since the end of September, when many investors were driving the blue-chip index toward record heights and betting that the worst of the credit crunch was over.
Trading is expected to be very light Monday ahead of the New Year's holiday, though market participants that day will keep an eye on the National Association of Realtors' November report on existing home sales. Sales are expected to be fairly weak, as they were in October.
On Wednesday, the first trading day of 2008, trading volumes should start rising again.
Wall Street will start the new year with minutes from the Federal Reserve's Dec. 11 meeting, when policy makers lowered key interest rates by a quarter point. The move at the time disappointed investors who had been hoping for a more aggressive cut to keep the financial system running fluidly. Any comments implying the Fed is worrying more about inflation and hesitant to reduce rates further could jolt the market.
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