Wall Street to watch Fed speeches, economic data this week for rate clues

NEW YORK — There are 6 1/2 trading sessions until the Federal Reserve says for certain whether it's lowering interest rates. They're apt to be some of the most anxiety-ridden times on Wall Street in years.

Investors have been hoping for weeks for a rate cut from the Federal Reserve, which meets Sept. 18. But now, after last week's disagreeable jobs report, Wall Street is more nervous than ever over the possibility that even the expected quarter-point rate cut next week may not be enough to save the economy from slipping into recession and stocks from sliding into negative territory for the year.

On Friday, investors got a shock when the Labor Department reported a drop in August payrolls, the first monthly decline in four years. The report was seen as evidence that problems with the sluggish housing market and tightening credit have, indeed, become a real threat to growth. Consumer spending accounts for about 70 percent of the economy, and when consumers don't have jobs, they tighten their purse strings and miss their bill payments.

The Dow Jones industrial average ended the week 1.83 percent lower, the Standard & Poor's 500 index fell 1.39 percent, and the Nasdaq composite index dropped 1.18 percent.

This week, investors will be wrestling with predicting the Fed's next move and deciding how drastic that next move should be.

There are worries that Wall Street has already priced in quarter-point rate cut, so even if it gets one, it may not boost stocks. Some investors are angling for a half-point rate cut, or even a rate cut before the Fed's meeting — a move that many analysts consider unlikely.

As of Friday, traders who bet on the Fed's next move were not only pricing in a full chance for the central bank to lower rates Sept. 18, but also a full chance of the rate being a full point lower, at 4.25 percent, by December.

But a rate cut, though widely anticipated, is not guaranteed. Bad economic news could cause more jitters for Wall Street this week, but also, any indication that the Fed might keep rates steady will most certainly trigger heavy selling.