Inflation, retail sales data to be released
Wall Street appears to have regained some stability after its nosedive two weeks ago, but investors aren’t ruling out more turbulence if upcoming data show consumers are spending less in the face of rising costs.
This week will bring several retail sales reports for February, as well as the government’s producer and consumer price indexes -- key gauges of inflation.
Friday’s job data showed that U.S. employment wasn’t crippled by the slower areas of the economy, but investors want to know whether the average American is still financially healthy enough to feed economic growth.
The market is expecting the Commerce Department on Tuesday to show that retail sales rose 0.3% in February compared with January. Also Tuesday, the International Council of Shopping Centers reports on chain store sales, and Redbook releases its retail sales index. Last week, individual retailers reported sluggish clothing sales for February.
Even if sales look robust, markets could be rattled by the producer or consumer price indexes. If they come in higher than expected, it would suggest that the Federal Reserve, which meets March 20-21, won’t lower interest rates later in the year. Such a move looked more probable right after Wall Street’s big plunge but appears much less probable now that economic data have kept showing moderating growth.
After falling last Monday, the indexes rebounded and finished slightly higher on the week -- which many investors saw as promising, given that the previous week was the worst in more than four years.
The Dow Jones industrials rose 1.3%, the Standard & Poor’s 500 index picked up 1.1% and the Nasdaq composite index rose 0.8%.
But the anxiety is far from over.
The Street will be watching not only economic data this week but also news about the sub-prime mortgage market and currency trading.
Jitters about financial backers bailing out of sub-prime lenders, which give loans to people with poor credit, have been a big factor in stocks’ recent volatility.
So has the dollar’s weakness versus the yen, which led many investors to take money out of high-yielding dollar assets bought with the low-yielding yen.
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The week ahead
Today
* Treasury Department reports on federal budget for February.
* Treasury bill auction.
* Quarterly earnings reports due from Hertz Global Holdings and Vail Resorts.
Tuesday
* Commerce Department reports on retail sales for February and on business inventories for January.
* Quarterly earnings reports due from Goldman Sachs Group, Revlon and Kroger.
Wednesday
* Commerce Department reports on the current account in the fourth quarter.
* Fraud and racketeering trial expected to begin for Conrad Black, who was forced from the helm of the Hollinger International newspaper empire.
* Quarterly earnings report due from Lehman Bros. Holdings.
Thursday
* Labor Department reports on producer price index for February.
* Labor Department reports on weekly jobless claims.
* Freddie Mac reports on mortgage rates.
* Quarterly earnings reports due from Bear Stearns and Winnebago Industries.
Friday
* Labor Department reports on consumer price index for February.
* Federal Reserve reports on industrial production for February.
