Wall Street to Focus on Greenspan Remarks

A nervous U.S. stock market fretting over high oil prices and inflation will watch Federal Reserve Chairman Alan Greenspan this week for any unexpected hints on the pace of future interest-rate rises.

After a disappointing first quarter when the blue-chip Dow and the broader Standard & Poor’s 500 both fell 2.6% and the tech-heavy Nasdaq sank 8.1%, winter-weary Wall Street will pounce on any sign from Greenspan that spring may bring new vitality to the market.

History is on investors’ side. Since 1950, April has been the best month for the Dow average since 1950, the Stock Trader’s Almanac says.

Nevertheless, as April began Friday, stocks continued to slide, giving up gains made in a mid-week rally. The Dow and the Nasdaq ended the week down a bit, and the S&P; 500 rose a mere 0.1%.

“A lot of traders are very nervous. They don’t know which way to jump,” said Michael Metz, chief investment strategist at Oppenheimer & Co.

“It’s an environment where there is really no external stimulus, so you watch the market action itself to see what it’s signaling to traders -- whether they should buy more or unload.”

With little in the way of earnings or major economic data for investors to trade on this week, Wall Street’s focus will be on Greenspan’s three public appearances.

Investors’ attention also will stay riveted on sky-high oil prices. Rising crude costs weigh on most stocks because they can curb consumer spending and hurt corporate profits.

Oil prices surged to a record $57.27 a barrel Friday, powered by a report the day before from top energy trader Goldman Sachs that said oil markets might have entered a “super spike” period that could eventually drive prices toward $105.

Appropriately, Greenspan’s first appearance of the week will address the energy situation. Tuesday, the Fed chairman is due to speak via satellite to the National Petrochemical and Refiners Assn.’s International Petrochemical Conference in San Antonio.

Wednesday, the Fed chairman will testify before the Senate Banking Committee on regulatory reform of government-sponsored enterprises, or GSEs, such as mortgage companies Freddie Mac and Fannie Mae.

Greenspan said recently that Freddie and Fannie’s mortgage holdings should be slashed to avoid “almost inevitable” problems for the U.S. financial system. The companies, which together account for nearly half of total residential mortgage debt outstanding, face the possibility of tougher supervision.

Friday, Greenspan will speak on consumer finance at a Fed-sponsored community affairs conference in Washington.

“The focus will be on Greenspan, oil and interest rates as the market tries to discern if inflation is going to pick up or if the economy is cooling off,” said Jeffrey Saut, chief investment strategist at Raymond James Financial. “There are a lot of crosscurrents right here. It’s a very difficult market.”

Analysts said a raft of economic reports that were published Friday implied that the Fed could extend its campaign of edging interest rates up in quarter-point increments to curb inflation rather than in bigger, more disruptive moves.

U.S. employers added only half the number of new jobs last month that were expected. That, along together with data showing slower growth in manufacturing and services, eased some concerns about steeper interest-rate rises.

The Fed has been on a rate-raising campaign since last June, pushing its bellwether federal funds rate up seven times successively by a quarter of a point at a time to 2.75%. It cited concern over signs of renewed pricing pressure when it last raised rates March 22.

From Reuters

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The Week Ahead

Tuesday

* Federal Reserve Chairman Alan Greenspan addresses the National Petrochemical and Refiners Assn.

* Institute for Supply Management updates its services index, which was mistakenly released Friday, with investors watching whether a key component of the report, the prices paid for consumer services, will be revised downward.

Wednesday

* Greenspan testifies before the Senate Banking Committee on reforming mortgage companies Freddie Mac and Fannie Mae.

* Quarterly earnings are due from Alcoa Inc., Monsanto Co. and WD-40 Co.

Thursday

* A number of major retailers are expected to unveil same-store sales figures.

* Quarterly earnings are to be released by Constellation Brands Inc., Rite Aid Corp., Pier 1 Imports Inc. and consulting firm Accenture.

Friday

* Greenspan discusses consumer finance at a conference sponsored by the Fed.