Stocks setting up for turbulent week

US stocks are setting up for another turbulent week that will begin with a focus, oddly enough, on the weather.

Traders juggling European debt worries and soft economic data are now staring at satellite images, tracking the path of Hurricane Irene, expected to hit New York over the weekend.

The unusually large storm traveled up the US East Coast on Friday, threatening 55 mil- lion people, and was expected to cause billions of dollars in property damage.

Major US exchanges are pre- paring to deal with power out- ages and flooding, and that could affect trading on Monday.

One senior trader at a propri- etary trading firm in New York said Friday that Hurricane Irene had destroyed any chance of a rally that had looked likely, giv- en the extent of short positions that had been building in equi- ty markets.

“If this hurricane is a disas- ter, my guess is we are going to be down 30-40 handles on Mon- day,” he said.

Property insurers Allstate and Travelers hit two-year intra- day lows on Friday, partly on worries over claims due to the hurricane.

“We intend to be open, but Mother Nature may have other plans,” said Lou Pastina, exec- utive vice president of NYSE operations.

After that, the focus may shift from the Federal Reserve’s eco- nomic outlook to the August payrolls report next Friday.

Fed Chairman Ben Ber- nanke, in a much anticipated address to central bankers in Jackson Hole, Wyoming, said most of the burden for ensuring a solid foundation for long-term growth lay at the feet of the White House and Congress.

President Barack Obama is expected to detail plans to cre- ate jobs after he returns from vacation the week after next. In- vestors will have a few days to position themselves ahead of Obama’s speech, with the key payrolls report for August due Friday.

“This was clearly a punt from Bernanke to Obama, who will announce a jobs initiative soon,” said Lance Roberts, CEO of Streettalk Advisors, an invest- ment management firm in Houston. “The market thinks we may now get stimulus from the government.”

In a move opposite to Ber- nanke’s baton-handing to Washington, some say stocks may find a white knight in the European Central Bank’s head Jean-Claude Trichet.

Scheduled to speak on a pan- el at Jackson Hole, Wyoming, on Saturday, Trichet could open the door for the ECB to buy more bonds from countries struggling with rising borrowing costs.

News earlier this month that the ECB was actively buying government bonds in the sec- ondary market boosted equities by giving some relief to inves- tors worried about the credit and fiscal health of the euro zone.