With more earnings reports due next week, the questions on investors' minds is whether the rally can last. The major indexes are up 11% in the last two weeks as U.S. firms have turned in batch after batch of profits that beat Wall Street analysts' expectations. Some sectors, like technology, have also increased their forecasts, restoring a measure of optimism about the economy that seemed to fade toward the end of June as dire report after dire report painted a bleak picture of the employment and housing landscape.  Among the companies likely to draw investor attention next week are the homebuilders. This week's report on existing home sales showed the third consecutive monthly increase, a rarity that had many experts predicting a bottom to the real estate fiasco. However, some analysts caution that national developers took on huge amounts of debt during the boom and that prices continue to fall, even if more homes are being sold.  On Monday, Meritage Homes ( MTH - news - people ) reports earnings, followed by the Ryland Group ( RYL - news - people ) on Wednesday and MDC Holdings ( MDC - news - people ) on Friday (see "Home Builders Headed For Hardship").  CIT Group ( CIT - news - people ) bond holders will have the week, but only the week, to make up their minds on the troubled lender's offer to redeem their bonds at 83 cents on the dollar. CIT, which lends to small and mid-size businesses, is asking creditors to accept the loss on their debts in order to avert a bankruptcy filing (see "How Long Can CIT Last?").  European nations are likely to sign a contract to produce a jet fighter after long delays in the program. The Eurofighter Typhoon will get a boost after the U.K. warmed to the proposal, which will keep production going. The airplane is being built by BAE Systems ( BAESF.PK - news - people ), Finmeccanica and EADS. Germany, Spain, Italy and the U.K. are backing the program.  On the economic front, how deep the recession is in the U.S. will be answered when the Commerce Department releases on Friday its gross domestic product numbers for the second quarter on 2009. Economists are expecting a much more mild drop than the 5.5% decline in the first quarter and the 6.3% decline at the end of 2008. Experts are predicting a drop of 2% or less. (See "Reducing GDP Negatives.")  Treasury bonds will be a focus for traders as the government prepares to issue $205 billion in debt next week. The enormous borrowing will be roughly split between short- and long-term debt. Investors have closely watched Treasury auctions this year for any signs that demand is waning for the enormous debt the U.S. is taking on to pay for the financial crisis. If the auctions fare poorly, the government will need to entice investors by raising yields, which could ricochet into higher mortgage rates and harm the economy further.  Thomson Reuters and the Associated Press contributed to this report.
Can a new batch of corporate earnings keep the rally going? CIT bondholders have until Friday to cut a deal. Eurofighter could get a reboot.