Wall Street braces for another pivotal week

updated 8:30 p.m. ET Nov. 23, 2008

NEW YORK - Wall Street faces another pivotal week, with investors enmeshed in a stock market knocked to 11-year lows amid growing fears about the fate of the nation’s ailing automobile industry and banking system.

The market, considered a forward-looking gauge of the economy, appears to lack any catalysts for buying. The triggers of last week’s massive stock losses continue to hang over the market, with no bailout seen for Detroit’s three automakers and Citigroup Inc. shares plunging to all-time lows.

And, that’s just the start of it — even more uncertainty is expected to come in a week shortened by the Thanksgiving holiday. A stream of economic reports, the start of the holiday shopping season, and more clues about the job market will keep investors scrambling in the coming days.

One thing investors can expect is more volatility in a fractious market, where thin volume exacerbates the market’s wild swings. Last week, the stock market slumped to lows not seen since 1997 on Thursday before recovering with a big rally the next day.

The question analysts pondered over the weekend is whether investors can find a way to build on Friday’s rally. The answer could come Monday afternoon when President-elect Barack Obama is scheduled to introduce his economic team.

“It seems to me that President-elect Obama has a chance to do something important that could improve people’s psychology,” said Peter Cohan, principal of Peter S. Cohan & Associates. “If Obama can reverse the psychology — make people believe that he understands the problem and will do what’s needed to solve it — then they will start to engage again with the economic system.”

Obama is expected to name Timothy Geithner, president of the New York Federal Reserve bank, as Treasury Secretary; Lawrence Summers, a former treasury secretary under President Bill Clinton, is expected to be named as director of the National Economic Council.

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There were some preliminary signs Sunday evening that investors were in a cautiously optimistic mood. Dow Jones industrial average futures were up 33 points, or 0.41 percent, at 8,069.00. Standard & Poor’s 500 index rose 5.70 points, or 0.72 percent, at 797.70, while Nasdaq 100 futures added 4.50, or 0.41 percent, at 1095.50.

On Friday, the stock market got a jolt of confidence after talk that Geithner would become Treasury Secretary began to float around trading floors. The Dow Jones industrial average surged nearly 500 points.

However, the big gain finished a pretty dismal week in which the Dow lost 5.3 percent, the Standard & Poor’s 500 index fell 8.4 percent, and the Nasdaq composite lost 8.8 percent. The Dow is off nearly 14 percent for the month of November, and has plunged 40 percent from last year.

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