Thursday Is the Test - Forbes

Speculation reached a fever pitch Wednesday, after comments from Fed Vice Chairman Donald Kohn and a drab economic outlook from the Beige Book seemed to hint at a cut when the Fed next meets December 11.
Financial stocks will bear watching Thursday, after the sector led the market higher. The Dow Jones industrial average raced to a 331-point gain, paced by a 6.5% gain from Citigroup. The index climbed 2.6%, to 13,289, as the major U.S. bank rose $1.97, to $32.29.
Investors brushed aside poor economic reports Wednesday to send stocks higher, and it bears watching Thursday if those reports will come back to have a negative impact.
Bargain hunters contributed to the rally, taking advantage of depressed stock prices. The market's two-day rally could extend as investors look to snap up shares ahead of the prime selling opportunity that would result from another Fed rate cut.
Home builders may struggle Thursday after a strong day Wednesday. The sector rose 5.4%, but the gains came on a day when the National Association of Realtors said existing home sales continued to decline in October thanks to a glut of unsold homes on the market and the difficult financing environment. Among Wednesday's climbers were Pulte Homes, up 45 cents, or 5.0%, to $9.53, and Centex, up $1.16, or 6.4%, to $19.44.
Retailers will also continue to be in focus for the rest of this week. Stocks have made a strong run over the past two days, getting their typical seasonal boost despite fears of weakening consumer spending during holiday shopping.
While shoppers may be spending less, they are still hitting the stores in droves, and retailers are reaping the benefits. Industry giant Wal-Mart gained $1.40, or 3.1%, to $47.23..
Electronics retailer Best Buy gained $1.48, or 3.0%, to $50.58, while rival Circuit City was up 18 cents, or 3.0%, to $6.26.
Online retailers were getting in the act too, as consumers spend more time buying gifts over the Internet. Shares of Amazon.com finished the session at $90.30, up $4.71, or 5.5%.
In addition to rate cut optimism and strength from financials and retail stocks, a pull back in oil prices also contributed to Wednesday's rise.
Crude dropped $3.80 to settle at $90.62 a barrel. A healthier-than-expected U.S. inventory report, speculation about an increase in OPEC production levels, and strength from the dollar all conspired to send prices lower. Do not rule out $100 oil just yet, though. Wednesday's decline may foretell a temporary retreat in crude prices, but if the Fed does indeed cut rates December 11 the move is likely to depress the dollar, which will in turn send crude back to its near triple-digit levels.
Economic data on tap for Thursday includes preliminary third-quarter GDP, the weekly jobless claims report, and new home sales figures for October.
At 7 p.m. Thursday Federal Reserve Chairman Ben Bernanke is due to speak at the Charlotte Chamber of Commerce, and it is a safe bet investors will hang on his every word, trying to wring out any indication that the Fed will cut rates December 11.