US stock investors will head into next week wondering if September will end as strongly as it began for the market, with manufacturing and personal income data among the top indicators on tap. The data will be watched for further clues on whether the economic recovery is still on track and to see if the market's recent rally has support.
Friday's advance left the three major US stock indexes with gains for the fourth week in a row, boosting investors' confidence that the upward move will continue. The Standard & Poor's 500 index is up 9.5 percent since the end of August. Its move above the 1,130 level on Monday represented a technical breakout that analysts said suggested further gains were likely. If the rally holds, it would make September the best month for the S&P 500 since at least March 2000, and the best September for stocks since 1939, according to Reuters' data.
"Sentiment has turned sharply higher over the past few weeks after very bearish readings last month," said Michael Sheldon, chief market strategist at RDM Financial, in Westport, Connecticut.
The data next week includes two manufacturing reports - one from the Institute for Supply Management and another from the ISM-Chicago, better known as the Chicago Purchasing Managers Index. A Commerce Department report on personal income and spending is also on the agenda.
The last ISM manufacturing report "helped propel the markets higher," Sheldon said, so "any disappointment could be a setback" for stocks. Tepid demand amid a US unemployment rate of 9.6 percent is expected to have caused a slowdown in manufacturing activity in September. The Institute for Supply Management's manufacturing index probably dropped to 54.5 in September from 56.3 in August, according to a Reuters poll of economists. A reading above 50 indicates expansion.
Data next week is also expected show moderate gains in personal income and consumer spending in August, consistent with views of an economy that is on a slow growth path, but not contracting. Both reports are due on Friday.
Next week also brings consumer confidence data, on Tuesday, as well as the Thomson Reuters/University of Michigan's final September reading on its consumer sentiment index on Friday.
The final figures on second-quarter gross domestic product will be out on Thursday, with the Reuters poll forecasting growth at an annual rate of 1.6 percent - matching the second, or preliminary, reading on the quarter's GDP.
On Friday, September domestic car and truck sales will be reported. A rise in total vehicle sales to an annual rate of 11.50 million units is seen versus August's 11.43 million.
The S&P 500's move above 1,130 this week let the broad index break out of its recent trading range.
Technical analysts are watching 1,173 as the S&P 500's next level of resistance. That level represents the high following the May 6 flash crash. Another level to watch is 1,220, the S&P 500's high for this year.
"What's so important about moving above a trading range is it signals a willingness to buy at higher prices. That type of evidence is supportive of further upside," said Chris Burba, short-term market technician at Standard & Poor's in New York.
But "after such a huge run since late August, the odds of taking a breather here are increasing," he said.
For the week, the Dow Jones industrial average ended up 2.4 percent, while the S&P 500 gained 2.1 percent and the Nasdaq climbed 2.8 percent.
Next week also marks the end of the third quarter and options analysts expect fund managers to try to pick up some of the quarter's better performers.
"A lot of option traders are anticipating window dressing, which is helping the winners of the last quarter, specifically Apple Inc, Netflix, Amazon.com and some material names, such as Freeport McMoRan and Vale," said Steve Claussen, chief investment strategist at online brokerage OptionsHouse LLC in Chicago.
The earnings slate is light, with just a handful of S&P 500 companies expected to report results, including Jabil Circuit, Paychex, Walgreen and Family Dollar Stores.
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