Wall Street shares seen to rise next week

Chelsea Emery, Reuters, New York

U.S. stocks are expected to rise next week as Wall Street paws through a cupboard of mixed economic data and seizes on the ingredients for a sustainable rebound next year.

Falling oil prices, another interest-rate cut expected on Tuesday, likely tax cuts and the Treasury's decision to stop selling 30-year bonds are the recipe to support stocks, at least in the short term, traders and money managers say.

Even a stunningly bad unemployment report on Friday couldn't deflate optimism, and blue-chips closed the session higher.

On Friday, the Labor Department said 415,000 jobs were shed in October and the unemployment rate soared to 5.4 percent -- the highest level in almost five years. Even so, the blue chips and the S&P 500 climbed.

"The action of the tape on Friday bodes extremely well for next week," said Kevin Connellan, head of equity trading for Northern Trust Co., which manages US$390 billion.

"We'll surely get another interest-rate cut and the fact that oil is below $20 a barrel is positive, but it's not enough to get euphoric about," said Cummins Catherwood, who oversees $800 million for Rutherford Brown & Catherwood. "I can't believe the rally is going to continue."

Major market indexes closed the week slightly lower than their levels last Friday as stocks priced in dour profit results and Wall Street fretted over signs consumer confidence has fallen.

For the week, the Standard & Poor's 500 index slipped 1.6 percent, the Nasdaq composite index declined 1.3 percent and the blue-chip Dow Jones industrial average lost 2.3 percent.

Oil slid to a two-year low on fears of wilting demand. While a drop in energy prices hurts oil companies, it is a boon for consumers and businesses.

On Friday, NYMEX crude futures fell as low as $19.69, the weakest level since July 1999.

Wall Street is also betting the U.S. Federal Reserve's rate cuts -- nine so far -- will soon underpin economic growth, as lower rates make it cheaper for businesses and consumers to borrow money. Economists polled by Reuters expect the Fed to cut rates another half point after falling GDP and rising unemployment showed the devastating impact of the Sept. 11 terror attacks.

Another positive for stocks is expected government tax cuts. The cuts may bring relief for consumers and businesses reeling from the Sept. 11 attacks and subsequent anthrax scares and deaths around the nation.