Key Economic Indicator Reports Due This Week

A barrage of economic data is due out this week, including reports on a handful of key indicators for the month of April, from retail sales and industrial production to producer and consumer price indexes.

Investors will be searching for signs of a return to economic health. After a better-than-expected batch of first-quarter earnings, investors are now demanding proof that the economy is stabilizing, said John Forelli, portfolio manager at Independence Investments in Boston.

“There are sprinklings of evidence that it’s happening, but no one’s convinced yet,” Forelli said. “We should expect a better economy over the coming months just from the initial relief of getting the war behind us, but the question is the sustainability of that bounce back.”

The Federal Reserve last week left interest rates steady at four-decade lows, but warned of the potential for a significant drop in inflation, saying that meant the economy was in danger of weakness ahead. But the Fed also offered reasons to be optimistic, hinting that it would be willing to keep interest rates low until the economy shows clear signs of stabilization.

Still, investors are cautious.

“The equity market has obviously had a great run-up. To go further you need to show that the economy is coming out of its funk,” said Jon Brorson, managing director at Neuberger Berman. “You can talk all you want about more cuts ... but big deal.”

So far this year, the Standard & Poor’s 500 is up close to 6%, the Dow Jones industrial average is up 3% and the Nasdaq composite index is up 14%.

Most S&P; 500 companies have beaten earnings estimates for the first quarter, raising hopes that corporate profits are on the mend. Now investors are hanging on every word corporate America offers on its forecasts for earnings and sales.

Quarterly scorecards from retailers Wal-Mart Stores Inc., Target Corp. and J.C. Penney Co. will grab the spotlight this week, particularly after they and other marquee names in the sector reported unexpectedly soft April sales.

Also on tap are results from Dell Computer Corp., software maker Computer Associates International Inc., semiconductor equipment maker Applied Materials Inc. and drug maker Schering-Plough Corp.

On Wednesday, the government’s retail sales report is due out. One of Wall Street’s biggest concerns throughout the economic slowdown has been that consumers, whose spending is the engine behind two-thirds of U.S. growth, will snap their wallets shut amid growing joblessness and geopolitical tensions.

Economists on average are expecting the data to show retail sales rose 0.4% overall and gained 0.1% excluding automobiles in April, according to a Reuters poll.

April reports on consumer and producer prices could have particular significance, given the Fed’s comments. The producer price index, due Thursday, is expected to show a 0.6% drop overall and a 0.1% decline minus volatile food and energy prices in April. The consumer price index, due Friday, is forecast to show a drop of 0.1% overall, while its core rate is expected to gain 0.2%, the poll showed.

Here is a quick overview of the upcoming week:

Tuesday: Commerce Department reports on international trade for March; Treasury Department and Federal Reserve System show off a new design for the $20 bill that will be issued this fall; Computer Sciences Corp., May Department Stores Co., J.C. Penney, Wal-Mart, Applied Materials and Schering-Plough issue quarterly reports.

Wednesday: Commerce Department reports on retail sales for April; Computer Associates International issues quarterly report.

Thursday: Federal Reserve reports on industrial production for April; Labor Department reports on producer price index for April; Commerce Department reports on business inventories for March; Labor Department reports on weekly jobless claims; Freddie Mac reports on mortgage rates; Kohl’s Corp., Target and Dell Computer issue quarterly reports.

Friday: Commerce Department reports on housing starts for April; Labor Department reports on consumer price index for April.