Investors waiting on earnings and inflation reports

With Wall Street coming off a record week that saw the Standard & Poor’s 500 index and the Dow Jones industrials barrel to record highs, investors will be waiting to see whether earnings and economic reports justify the market’s huge advance.

Eleven of the 30 companies that make up the Dow index release their quarterly results this week, and the government will come out with key readings on inflation.

The data will help investors determine whether the solid corporate growth amid moderating price pressures they’re looking for is indeed in store for the second half of 2007.

Most analysts expect second-quarter earnings to rise 4% to 5%, while Standard & Poor’s is anticipating growth of closer to 6%.

Better-than-expected results could lead to a stock surge. But if companies warn of problems going forward, Wall Street could give back its impressive gains.

The stock market, which had wobbled for a month on worries about interest rates and the sub-prime mortgage market, rallied on scattered evidence that the consumer is still strong. The Dow rose 2.2% last week; the S&P; climbed 1.4%; and the Nasdaq composite index gained 1.5%.

Though the market seemed to set aside its interest-rate fears last week, those jitters could arise again if government inflation gauges are higher than expected.

The Labor Department releases the producer price index and the consumer price index Tuesday and Wednesday, respectively. The June PPI is forecast to show a rise of 0.1% after a May jump of 0.9%. The core PPI, which excludes food and energy prices, is expected to have risen 0.2%, following a similar increase in May.

The market predicts that the June CPI will reflect a 0.2% increase, down from May’s rise of 0.7%, and that the core CPI will also be up 0.2%, higher than the 0.1% uptick in May.

Investors will also search for clues about future rate moves when Federal Reserve Chairman Ben S.Bernanke speaks Wednesday to the House Financial Services panel and when the Fed releases minutes Thursday from its Open Market Committee’s June meeting.

At that meeting, the central bank held interest rates steady and reiterated that inflation was its prime concern.

This week’s rush of second-quarter results will come from all corners of the economy -- airlines, banks, chip manufacturers, drug makers and more.

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At a glance

Today

Treasury bill auction.

Quarterly earnings report due from Mattel.

Tuesday

Labor Department reports on producer price index for June.

Federal Reserve reports on industrial production for June.

House Energy and Commerce oversight and investigations subcommittee holds a hearing on whether the Food and Drug Administration can ensure the safety and security of the nation’s food supply.

Quarterly earnings reports due from Charles Schwab, Intel, Wells Fargo, Yahoo, Coca-Cola and Merrill Lynch.

Wednesday

Labor Department reports on consumer price index for June.

Commerce Department reports on housing starts for June.

Quarterly earnings reports due from EBay, Allstate, AMR, Delta Air Lines, Gannett and Southwest Airlines.

Thursday

Conference Board reports its monthly leading economic indicators index.

Labor Department reports on weekly jobless claims.

Freddie Mac reports on mortgage rates.

Federal Reserve Chairman Ben S. Bernanke testifies before Senate Banking, Housing and Urban Affairs Committee.

Quarterly earnings reports due from Advanced Micro Devices, Google, McClatchy, Safeway, Bank of America, Dow Jones, Microsoft and Motorola.

Friday

Contract talks to formally begin between United Auto Workers, Chrysler Group and Ford Motor Co.

Earnings reports due from Boston Scientific, Citigroup, Caterpillar and Wachovia.

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Source: Times Staff and Wire Reports