Santa came early for Wall Street this year by giving the S&P 500 a 22 percent gain for 2009, and with just eight trading days left in the year, stock investors are not expecting to find much more under the tree.
The Grinch showed up early, too, with a heavy winter snowstorm on the East Coast forcing some stores and malls to close on Super Saturday -- on the last holiday shopping weekend before Christmas.
Investors will be anxious to find out if consumers stepped up their online shopping to get all those stockings filled before Christmas morning, which falls on Friday this year.
With consumers in focus in the countdown to Christmas, this week's major U.S. economic indicators will include the Reuters/University of Michigan consumer sentiment index, personal income and spending data, and the latest weekly jobless claims. On Thursday, the New York Stock Exchange trading floor will close early in observance of Christmas Eve.
Financial markets will be closed on Friday for Christmas Day.
Investors will also pay attention this week to a final reading on third-quarter gross domestic product. But with the market already factoring in an economic recovery, the GDP data could evoke a muted response. Existing home sales and new home sales also will be worth noting, due to the central role the housing sector's collapse played in last year's financial crisis.
Tensions between Iraq and Iran over a disputed oilfield will also be on the radar and could hurt stocks if the situation escalates.
Markets historically enjoy a short, sweet Santa Claus rally in December's final days and early January.
But with the S&P 500 <.SPX> climbing 63 percent from March's 12-year closing low, investors question what catalyst could drive the market significantly higher.
I thought there might be one more push higher, but it now looks like investors are willing to let the market consolidate its gains this year, and are happy to lock in the profits that they've established, said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.
The Standard & Poor's 500 Index has drifted in a range between 1,085 and 1,119 since the start of November as market players became more concerned with preserving 2009's gains rather than taking risky bets. The S&P 500 is up 22.1 percent for the year.
This month, the U.S. dollar's rebound has limited the stock market's gains as the inverse correlation between the greenback and equities deteriorated.
On the plus side, though, is the ritual of year-end window dressing, when fund managers sell underperformers and buy some gainers to spruce up portfolios, which could lift stocks that have done well this year.
Volatility may increase this week as fewer participants make it easier to push the market around. Indeed, the market has generally climbed on light volume this year, but most analysts expect stocks to grind sideways in the days ahead.
You will probably see some modest window dressing going on, so in my opinion, you could see higher-quality stocks do a bit better, said Haag Sherman, co-founder and chief investment officer of Salient Partners, an investment firm in Houston. But I don't think there's going to be any material movements between now and year-end.
RETAIL'S ARCTIC WINTER
Most importantly for the market's outlook, investors will assess the holiday shopping season after Super Saturday weekend. Retailers had hoped to see a surge of shoppers over the last weekend before Christmas. But that was before Mother Nature played her wild card with a huge East Coast snowstorm that made driving and even walking dangerous in many areas.
Even before the storm, experts doubted whether Super Saturday shopping would be enough to push holiday sales much above last year 's dismal tally.
Last year was the first time that holiday sales fell during this decade, according to the International Council of Shopping Centers, as shoppers fretted about the financial crisis and growing unemployment.
Spending has remained anemic this year. Consumers' reluctance to spend remains one of the biggest headwinds to the U.S. economic recovery.
Last year was a train wreck. It was the arctic winter of retail, said Lawrence Creatura, equity market strategist and portfolio manager at Federated Clover Capital Advisors in Rochester, New York. Surpassing that is not a high hurdle.
A snapshot of how retailers fared over the weekend will come from anecdotal evidence about how busy - or not -- stores were, as well as sales and traffic data from ShopperTrak, a private firm that monitors such statistics.
Further insight into consumers' purchasing power and their inclination to spend will come on Wednesday from a final reading of December consumer sentiment from the Reuters/University of Michigan data. Economists expect an index reading of 73.5, compared with a previous reading of 67.4, according to a Reuters poll.
The struggling job market's pulse will be taken on Thursday, with the release of initial claims for jobless benefits, expected to fall to 470,000 from 480,000 the week before. For details on economic indicators, see
Only a few major earnings reports are on tap, including results from Walgreen Co , ConAgra Foods Inc and Micron Technology Inc .
MODEST GROWTH IN GDP AND HOME SALES
The government's final look at third-quarter gross domestic product, due on Tuesday, is expected to show the U.S. economy grew at an annual rate of 2.8 percent in the stretch from July through September, in line with the previous reading.
Existing home sales for November also will be released on Tuesday; economists forecast sales will rise to a seasonally adjusted annual pace of 6.25 million units from 6.10 million in October.
On Wednesday, new home sales for November are expected to edge up to a seasonally adjusted annual rate of 440,000 units from 430,000 in October.
EYES ON IRAQ AND IRAN
A potential headwind for markets could be any increase in tensions between Iraq and Iran. On Friday, Iraq demanded that Iran immediately withdraw its soldiers from a disputed oilfield on the two countries' border, but Iran denied any incursion.
But on Sunday, officials from both countries said Iranian troops have withdrawn partly from a disputed oil area claimed by both Tehran and Baghdad, possibly defusing a border feud straining the two nations' delicate ties.
While the stock market showed no reaction on Friday, an escalation in hostility between Iraq and Iran could push investors out of stocks and into safe-haven assets such as the dollar or U.S. Treasury bonds.
Any acceleration of aggression, or potential disruption in the supply of oil would have a more meaningful impact on investor sentiment, Creatura said.
U.S. crude oil futures settled on Friday at $73.36 a barrel, up 71 cents, or almost 1 percent, with Middle Eastern tensions supporting oil prices.
(Reporting by Leah Schnurr; Additional reporting by Ellis Mnyandu; Editing by Jan Paschal)