Deutsche Banc is expecting confidence, an indicator of how willing consumers are to keep spending, to have dropped 12 points in September, to 102. To arrive at the number, the Conference Board asks 5,000 households to rate their perceptions of business and employment conditions and plans for major purchases from the first to the 18th of the month. But Leahey wonders whether the Board will split the sample of responses into pre- and post September 11, when the domestic business landscape shifted dramatically. If the figure isn't adjusted, he says, it won't give a very meaningful reading of the current consumer climate. The number of initial jobless claims is expected to spike this week to 425,000 in light of last week's massive layoffs in the airline industry.
Housing is another once-strong sector that is likely to crack.
When the markets will bottom and the business climate will turn around remains unclear. But there's still a good deal of political uncertainty surrounding the U.S. response. And if retaliation sparks a Mideast conflagration, it has the potential to send the global markets into a downward spiral, further dragging down the U.S. economy. Furthermore, an interruption in oil imports could hurt domestic businesses. Corporate earnings warnings will probably continue for another month and, until then, says Hill, the market will have difficulty holding a meaningful rally.