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Market Eye
| Wall St Week Ahead: Oil's fall, dollar's rise key to gains | 16/08/2008 02:27:41 | Bolstered by falling oil prices and a rising dollar, U.S. stocks could extend their modest gains this week, even in the face of still troubling consumer- and housing-related data.
Oil's downward trend helped boost consumer spending slightly in the past month, with crude hitting a three-month low below $114 a barrel on Friday. But its path remains volatile, prompting some investors to remain cautious about the market.
The dollar's recent jump suggests to some that the U.S. economy's health could improve. The U.S. economy began weakening before others and now that investors are seeing poor economic data from Europe and Asia, some think the United States is closer to a recovery than others.
"For the past two years, crude has followed the dollar almost lock-step," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco. "The strength we've seen in the dollar is almost certainly helping bring crude down. At this point, as you move backward, it actually acts as a stimulus on the economy."
That said, news about the consumer cannot be ignored. Although gas prices have fallen since July, consumer spending -- which drives two-thirds of the U.S. economy -- continues to falter. | Market
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