Rate cuts, increased government spending expected

This week, investors will be watching Congress and the Federal Reserve. Many on Wall Street are expecting the Fed to cut interest rates Tuesday. Many are asking, how big will the rate cut be? Economists are almost evenly divided as to whether the Federal Open Market Committee will cut interest rates by 25 or 50 basis points. The Fed has already cut interest rates nine times this year. \nInvestors will also keep track of government spending programs now in Congress. Republicans and Democrats have been arguing over their competing agendas. Democrats are looking to help the unemployed while Republicans are pushing for tax breaks. Many on Wall Street are predicting a number of stimulus packages will help the nation recover economically.\nLast week\nInvestors brushed off a number of negative economic reports. The markets lost ground, but selling was limited considering the amount of bad news released. Friday, the Dow Jones Industrial Average gained 59.64, to close at 9323.54. The Nasdaq closed down .57 points, to 1745.73. The S&P 500 ended the day up 3.12 points, to close at 1,087.22. The Dow lost 2.3 percent for the week and the Nasdaq lost 1.3 percent. \nStock News\nAetna, BP, Cisco, Disney, News Corp., Qualcomm and Xerox are all expected to report earnings this week.\nFriday, Microsoft and the Department of Justice submitted their settlement agreement to a federal judge. Attorneys general from 17 states and the District of Columbia have until Tuesday to sign on to the deal. Wall Street appears to have applauded the deal. Conversely, opponents of Microsoft have said the deal is too soft. \nThursday, Enron announced it had lined up $1 billion of new credit. Investors have punished the struggling energy firm's stock price in past weeks. At issue are questionable deals run by former chief financial officer Andrew Fastow. The company has taken a $1 billion charge against third quarter earnings due to the transactions. Additionally, the credit rating agency S&P cut Enron's corporate credit and senior unsecured debt ratings to only two notches above junk status.\nFinal Note\nMonday, Cisco Systems Inc. is expected to report earnings. Analysts expect Cisco to earn two cents a share for its fiscal first quarter ended Oct. 27, according to Thomson Financial/First Call. A year ago, Cisco earned 18 cents per share. Many analysts have said that Cisco may have begun to stabilize, even though sales are expected to decline by more than 30 percent.