TORONTO — The rally stock markets have been enjoying since the
beginning of the month seems to have stalled, and analysts say it will
take some very positive data to get investors excited again.

``The bulk of the improvement that we’ve seen this month is really a
recoil to the dismal performance in August,’’ said Andrew Pyle,
investment adviser with ScotiaMcLeod in Peterborough, Ont.

``But in order for the rebound to be extended, you’ve got to have numbers continually coming in better than expected.’’

This September — traditionally the weakest month of the year for equity
markets — has defied its reputation with a flourish. The TSX has gained
2.1 per cent so far this month, while the Dow Jones is up an even more
impressive 5.9 per cent.

However, the rally hit the brakes last week, with the TSX inching up
0.6 per cent and the Dow up 1.4 per cent as investors wait for
companies to begin reporting third-quarter earnings.

``You’re going to find investors unwilling to place aggressive bets
ahead of these fresh earnings numbers that are going to be coming out
in the next few weeks,’’ Pyle said.

This week, investors will be keeping a close eye on a slew of U.S.
housing data in the hope that the real estate market is finally
starting to bounce back.

But ``any improvement off abysmally low readings for home sales will
only reflect how deep the plunge has been after the expiry of tax
incentives,’’ commented Avery Shenfeld, chief economist with CIBC World

That plunge was underscored last week when foreclosure listing firm
RealtyTrac Inc. said lenders repossessed more homes in the United
States in August than in any month since the start of the subprime
mortgage crisis.

This week, an index measuring the confidence of home builders will be
released Monday, followed by data on housing starts Tuesday, home
prices on Wednesday, existing home sales on Thursday and new home sales
on Friday.

Pyle said the housing data could prove to be ``the pivot number for the month.’’

``It’s quite possible that in the latest round of numbers we may
actually see a pickup, whether it’s in sales activity or maybe even
starts,’’ he said.

``I think if we were to see that, that might be enough to give the market that added lift.’’

Canada economic data scheduled to be released this week include
consumer price numbers on Tuesday and retail sales data on Wednesday.

The U.S. Federal Reserve’s interest rate announcement is also scheduled
for Tuesday. It’s widely assumed that the weak economy will prompt the
Fed to leave its key lending rate at its historic low of 0.25 per cent,
but investors will be listening carefully to any change in language.

Chairman Ben Bernanke indicated at the end of August that the Fed was
prepared to make a major new investment in government debt or mortgage
securities if the economy worsened significantly or if the Fed detected

This cheered investors at the time, but there has been a marked improvement in the economic data since then.

``I don’t think the Fed is going to do anything substantive,’’ said
John Johnston, chief strategist of the Harbour Group at RBC Dominion

``At best they’ll repeat their promise to do something, and markets are
probably going to say, ’Well, we want some action.’ So I’m inclined to
be a bit cautious going into this week.’’

As the rally stalls and investors grow more cautious, it’s going to take a lot to push markets higher, Johnston added.

``To push the rally further, you’d need to be very pleasantly
surprised,’’ he said. ``The risk is that markets interpret any outcome
from a somewhat negative perspective.’’