Reports due on manufacturing, service sectors

new york -- Wall Street is on surer footing than it was a month ago, but it enters the fourth quarter today with many questions still unanswered about the health of the nation’s economy and corporations.

At this point, the credit markets have loosened up some, the Dow Jones industrial average is only about 100 points below its record, and investors appear to be more confident the Federal Reserve will do what it can to keep the economy from slipping into recession.

The third quarter, after all the tumult in the housing and credit markets this summer, ended with the Dow up 3.6% after the Federal Reserve lowered key interest rates.

However, not everything that keeps the stock market afloat is under the Fed’s control. The housing market is the weakest it has been in years, and some builders have said recently that they see conditions deteriorating through next year. Credit has improved, but the financial markets remain unsure how problems with surging mortgage defaults and excessively leveraged debt will shake out.

“Everybody’s nervous. This housing thing is big, and it’s going to continue,” said Kim Caughey, equity research analyst at Fort Pitt Capital Group in Pittsburgh.

This week will bring data not only on August’s pending home sales but also on three major pillars of the nation’s economy: manufacturing activity, service sector activity and employment.

Third-quarter earnings don’t arrive in earnest until mid-October, and the Federal Reserve isn’t scheduled to discuss interest rates until the end of the month, so this week’s reports could help investors figure out where the economy is headed, whether rates will keep falling and how corporate America is weathering the uncertainty.

The Institute for Supply Management is expected to report today that manufacturing rose in September at a rate comparable to that of August, according to the median estimate of economists surveyed by Thomson Financial. An institute report Wednesday, however, is expected to show that growth slowed in the service sector, which makes up a larger portion of the economy than manufacturing does.

On Friday, the Labor Department is expected to report that the unemployment rate ticked up to 4.7% from 4.6% in September, after a surprising payroll decline in August of 4,000.

Meanwhile, Wall Street will keep an eye out for corporate news this week.

Most companies are in a “quiet period” ahead of the earnings deluge in mid-October, but a few companies including Palm Inc. and Research in Motion Ltd. will release quarterly results.

Also, investors will be watching for earnings pre-announcements. Housing-related and financial-services companies may issue warnings to investors if they anticipate losses or if they had to write off or mark down a significant number of loans from July to September.

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At a glance

Today

Treasury bill auction.

Institute for Supply Management reports on activity in the manufacturing economy for September.

Quarterly earnings reports due from Palm and Walgreen.

Tuesday

Automakers release sales figures for September.

Senate hearing on mine safety issues.

House hearing on telecom competition.

House hearing on regulators’ ability to react to threats in the financial system.

Wednesday

Institute for Supply Management reports on activity in the non-manufacturing economy for September.

House hearing on whether increased postal rates would put mailers out of business.

House hearing on the effect of allowing the Internet tax moratorium to expire.

Thursday

Senate hearing on port security

Senate hearing on Consumer Product Safety Commission reform.

House hearing on food and consumer product import safety.

Labor Department reports on weekly jobless benefit claims.

Commerce Department reports on factory orders for August.

Freddie Mac reports on mortgage rates.

President Bush to discuss the federal budget in a speech to the Chamber of Commerce and Industry in Lancaster, Pa.

Quarterly earnings reports due from Constellation Brands, Marriott International and Research in Motion.

Friday

Labor Department reports on employment for September.

Federal Reserve reports on consumer credit for August.

Sources: Times Staff and Wire Reports