Data Expected to Show Continuing Growth

Plenty of data are due out this week, and all of it is expected to show that the economy’s gradual growth is continuing.

For July, U.S. retail sales are expected to rise, as are the producer price index and the consumer price index.

At the end of the list, to be released Friday, is the University of Michigan’s preliminary survey on consumer sentiment for August.

All these numbers will grab Wall Street’s attention for clues about personal spending, consumers’ view of the economy and inflation.

Also being closely watched is Tuesday’s meeting of the Federal Reserve’s policymaking body.

A key short-term interest rate is at a 45-year low, and the Federal Open Market Committee is expected to keep it there. Fed officials, however, certainly will spend time discussing what, if anything, they can do to stop long-term rates from rising and derailing the economy.

This spring, Federal Reserve Chairman Alan Greenspan and his colleagues drew praise for cleverly manipulating market expectations with talk of deflation, which is a sustained fall in prices. Now, they are facing critics who say they misled the bond market and caused a big run-up in long-term rates during the last month.

For that reason, many analysts see the Fed meeting as an opportunity for the central bank to correct the botched signals and to calm the jittery bond market.

“We are facing a dangerous situation with the threat that interest rates will go up so fast that it will choke off the recovery,” said economist David Jones, author of four books on the Fed. “The Fed has to state more clearly what its intentions are.”

“No one expects the Fed to do anything, and I think it’s a good bet that they will maintain their position,” said Milton Ezrati, senior economic strategist at Lord Abbett & Co. “I don’t think there’s going to be any news there. I’d be more than surprised if they surprised.”

A Reuters survey Aug. 1 of the 22 top bond dealers on Wall Street who deal directly with the Fed found that 18 saw the central bank likely to keep rates on hold well into next year. Four were expecting another cut this year to shore up growth.

“The earnings season is finished and it’s the summer doldrums,” said John Vail, senior strategist at Mizuho Securities USA Inc. “I don’t think any of that data will make a big splash.”

July retail sales, due out Wednesday, are expected to rise 0.9% after a previous gain of 0.5%, according to economists polled by Reuters.

On Thursday, the U.S. Bureau of Labor Statistics will release the July producer price index, a gauge of inflation that measures wholesale price levels. The overall July PPI is expected to rise 0.1%, a slower pace than its June gain of 0.5%.

On Friday, the consumer price index, the measure of the change in the cost of a fixed basket of products and services, will be released.

The overall CPI is expected to rise 0.2% in July, after a 0.2% gain a month ago, a Reuters poll showed.

And then comes the University of Michigan’s preliminary survey on consumer sentiment -- forecast at 91, up from 90.9 in July.

On the corporate earnings front, the week is expected to be relatively quiet, given that most companies already have released their quarterly reports.

But there will be a few noteworthy report cards from industry bellwethers, including Dell Inc., the No. 1 personal computer maker, and Wal-Mart Stores Inc., the discount retailer that also is the world’s biggest company in terms of revenue.

“We need to be seeing growth, and Dell is such a big computer company that if they’re seeing weak sales, that could be a problem,” said Peter Dunay, chief markets strategist and options specialist at brokerage Wall Street Access. “At the same time, if they’re seeing orders picking up, you could see that helping Intel and some of the other” technology stocks.

Here is a look at some of the major business and economic events scheduled for this week.

Tuesday:

* Federal Open Market Committee meets to discuss interest rates.

* Computer Sciences Corp., J.C. Penney Corp., May Department Stores Co. and Applied Materials Inc. issue quarterly reports.

Wednesday:

* Federated Stores Inc., El Paso Corp., Tiffany & Co. and Wal-Mart issue quarterly reports.

* Commerce Department reports on retail sales for July and business inventories for June.

* Labor Department reports on weekly jobless claims.

* Federal Reserve reports on consumer credit for June.

Thursday:

* Kohl’s Corp., Target Corp. and Dell issue quarterly reports.

* Commerce Department reports on international trade for June.

* Labor Department reports on producer price index for July and weekly jobless claims.

* Freddie Mac, the mortgage company, reports on mortgage rates.

Friday:

* Liberty Media Corp. and Navistar International Corp. issue quarterly reports.

* Labor Department reports on consumer price index for July.

* University of Michigan releases its consumer sentiment survey.

* Federal Reserve reports on industrial production for July.