Will the Federal Reserve Board raise short-term interest rates next week? Will it simply adopt a "tightening" bias? These and other urgent questions will be answered next week as investors gear up for the last complete week of trading in 1999.
The possibility of another interest-rate hike became more real this week after overall retail sales jumped 0.9 percent in November, much higher than the 0.5 percent most economists had predicted.
Not exactly the kind of signal Chairman Alan Greenspan and company needed to see heading into Tuesday's policy meeting. And if retail spending was out of hand in November, one shudders to think of what the December figures will look like.
Despite the nagging Fed/interest rate worries, the Dow Jones industrial average managed to pick up 32 points to 11,257.43 this week while the white-hot Nasdaq composite marched up 133 points to a record close of 3,753.11.
Meanwhile, the bond market was bracing for Tuesday's Fed meeting as the benchmark 30-year U.S. Treasury bond was down 5/32, driving the yield up to 6.40, a two-year high.
Analysts said they believed the stock market has not been fazed by the soaring bond yields because it has already factored in at least one rate increase next year, starting in February, regardless of the latest economic indicators.
"What I am hearing is that there is a lot of speculation the Fed is going to raise interest rates no matter what," said Richard Cripps, chief market strategist at Legg Mason Wood Walker.
Those holding out hope for no rate change point to the fact that the Consumer Price Index gained just 0.1 percent last month and increased a moderate 0.2 percent in the closely watched "core" component. Those numbers were even better than the 0.2 percent in both the overall and core CPI which economists polled by Reuters had predicted.
Looking ahead to next week, 3Com Corp. (Nasdaq: COMS) will report its second-quarter results. First Call consensus is looking for a profit of 34 cents a share.
Last quarter, 3Com hurdled analysts' estimates when it raked in $119 million, or 33 cents a share, on sales of $1.38 billion.
Its shares closed up 3/16 to 48 3/4 Friday. The stock hit a 52-week high of 52 3/16 earlier this week after falling to a low of 20 in April.
Micron Electronics Inc. (Nasdaq: MUEI) will also report its first-quarter results next week. It will be interesting to see how the PC maker fairs after it blew away analysts' estimates last quarter.
In its fourth quarter, Micron Electronics earned $13.7 million, or 14 cents a share, on sales of $333 million.
First Call consensus is looking for a profit of 14 cents a share this time around.
Despite its fourth-quarter success, Micron Electronics shares have hardly taken off.
Its shares closed up 2 1/16 to 12 1/8 Friday, just above its 52-week low of 9 set in June.