Spending, inflation and housing data due

Wall Street will face a slew of data this week: on Americans’ spending, inflation at the producer level, home sales and manufacturing.

So far this year, economic data have been mixed but worrisome, and that has made for a turbulent stock market. And investors are bracing for more of the same for some time to come.

Last week, the Dow inched up 0.3%, the Standard & Poor’s 500 index rose a modest 0.2% and the Nasdaq composite index slipped 0.8%. The three indexes are all down sharply for the year, and there’s no sign yet of a true rebound in the stock market.

“Could it fall further? Sure,” said Hans Olsen, chief investment officer in JPMorgan’s private client services. He noted that particularly troubling news could easily push the S&P; back under the 1,300 mark, a level it briefly sank below in January.

It’s possible for the stock market to end the year with decent returns, Olsen said, but “to say we’re getting a bottom here might be premature.”

Stock markets generally fall 30%, peak to trough, during a recession, said Christian Menegatti, lead analyst at economic and financial website RGE Monitor. So it’s quite possible, he said, depending on how weak the economy gets this year, for stocks to fall an additional 15%.

The biggest drag on the economy has so far been, of course, the housing market.

The National Assn. of Realtors reports today on sales of existing homes last month. According to the median estimate of economists surveyed Friday by Thomson Financial/IFR, existing-home sales are expected to have slipped by about 1% in January from December. Then on Wednesday, the Commerce Department reports on sales of new homes, which are anticipated to have slipped modestly in January.

Wall Street is concerned with not only sales but inventories, which are at very high levels because demand is so weak. The housing market can only start bouncing back once inventories start edging lower -- something that many analysts don’t expect to happen for a while.

But a cash-strapped consumer also is a problem.

The government releases its readings on consumer spending and income Friday, with both expected to rise by 0.2%. Anything below those levels could raise red flags for investors.

And inflation worries remain. The consumer spending report’s year-over-year inflation measure is forecast to come in at 2.2%, which is above the Federal Reserve’s unofficial comfort zone. And last week, the Labor Department’s consumer price index showed higher-than-expected upticks.

On Tuesday, the Labor Department issues its reading on prices at the wholesale level. The producer price index is expected to have risen by 0.3% in January after falling by 0.1% in December, and the core index, which excludes food and energy, is expected to have risen by 0.2%, the same as the previous month.

While the consumer is struggling, businesses are having a hard time offsetting that weakness.

Wednesday, the Commerce Department reports on orders of durable goods, which are expected to drop by about 3.5% after rising by 5.2% in December. And the Chicago purchasing manager’s index -- considered a precursor to the Institute for Supply Management’s U.S. manufacturing report next week -- is expected to show that activity was flat, perhaps even contracting, in February.

What Fed Chairman Ben S. Bernanke implies is that the central bank’s monetary policy during his testimony to Congress on Wednesday and Thursday could provide some short-term direction.

But doubts about the effectiveness of interest rate cuts in the tight credit markets -- not to mention the gloomy tone Bernanke adopted during his last congressional appearance -- could keep investors on edge for a while. Although rates have come down sharply, banks have become less willing to lend and housing demand is low.

“You can make money cheap. You can’t necessarily make people take out mortgages, or have institutions want to lend that money,” Olsen said.

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At a glance

Today

National Assn. of Realtors reports on existing-home sales.

Quarterly earnings reports are due from Lowe’s and Nordstrom.

Tuesday

Conference Board releases its consumer confidence index.

Labor Department reports on the producer price index.

Quarterly earnings due from CBS, DreamWorks Animation SKG, H.J. Heinz, Home Depot, Macy’s, Office Depot, Sirius Satellite Radio, Target and Tenet Healthcare.

Wednesday

Commerce Department reports on durable goods orders and new-home sales.

Federal Reserve Chairman Ben S. Bernanke testifies before the House Financial Services Committee.

Quarterly earnings due from Dynegy, Limited Brands, Toll Bros. and Washington Post.

Thursday

Commerce Department reports on the gross domestic product.

Labor Department reports

on weekly jobless benefit claims.

Freddie Mac reports on mortgage rates.

Fed chief Bernanke testifies before the Senate Banking, Housing and Urban Affairs Committee.

Quarterly earnings reports due from American International Group, Cablevision Systems, Dell, Freddie Mac, Gap, Kohl’s, Liberty Media, Live Nation, Sears Holdings, Smithfield Foods, Sprint Nextel, Viacom and XM Satellite Radio Holdings.

Friday

Commerce Department reports on personal income and spending.

Source: The Associated Press

Los Angeles Times