Profits, data could extend Wall Street gains

By Ellis Mnyandu

NEW YORK (Reuters) - Wall Street could extend gains next week if financial results from market bellwethers such as Cisco Systems Inc (CSCO.O: Quote, Profile, Research) and data suggest the U.S economic slowdown isn't as dire as once feared.

Besides news from Cisco, the largest network equipment maker, the technology sector will be on the front burner because of Microsoft Corp's (MSFT.O: Quote, Profile, Research) pursuit of Yahoo Inc (YHOO.O: Quote, Profile, Research). Microsoft has made an unsolicited bid now worth $42.4 billion for the Web company, but Yahoo has played hard to get.

Economic reports next week are expected to shed light on the vast services sector, housing and productivity.

Also high on the agenda will be a speech by Federal Reserve Chairman Ben Bernanke on mortgage delinquencies and foreclosures on Monday.

Investors will have a batch of earnings reports to sift through as they also gauge the outlook for an economy battered by a housing slump and record oil prices.

"There needs to be more proof, either in economic data or continued strong earnings reports, to be able to move us significantly higher," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

Recent reports, including Friday's government release on April payrolls, helped calm worries about the economy's slump, sending major indexes to levels last seen in January.

The market also moved upward on another rate cut by the Fed on Wednesday, a pullback in commodity prices and a rebound by the dollar. But how long this bullish scenario will play is unclear.