Wall Street is likely to focus on retail earnings and inflation and other data this week to get a read on whether the US economy is slowing enough to stave off recession and prompt the Federal Reserve to eventually lower interest rates.
The market is coming off an erratic week that ended quietly as investors, having digested results from US congressional elections last Tuesday, turned their attention to upcoming economic reports including minutes from the Federal Reserve's last meeting and the Labor Department's producer price index (PPI).
The retail reports -- as well as the Commerce Department's monthly retail sales report -- will be key, as two-thirds of economic growth is driven by consumers. Accordingly, Wall Street will eagerly await forecasts from retailers like Wal-Mart Stores Inc and Target Corp about the holiday sales season.
Investors hope the retail sales report as well as a reading of the PPI, which measures the wholesale cost of goods, will show an economy that is slowing adequately to help make a case for the Fed to lower short-term interest rates. The central bank left interest rates unchanged at its last three meetings, interrupting a string of 17 consecutive increases over two years.
Investors are often anxious for the latest economic data as they try to determine whether the Fed, as some market observers contend, overreached in its efforts to curb inflation and slowed the economy too quickly.
The flow of economic news for the week is expected to start slowly, starting with the budget data from the Treasury Depart-ment yesterday and a bevy of information including Commerce Department data on retail sales as well as business inventories today.
The Labor Department is also set to release today the PPI and its core PPI, which excludes often volatile costs for energy and food. The figures are closely watched as investors look to the gauge the threat of inflation.
Tomorrow not only brings the Fed's October meeting minutes but a weekly Energy Department report on crude inventories.
On Thursday, investors can expect the Labor Department's consumer price index, the key measure of inflation. The core figure, like that of the producer price index, excludes food and energy costs.
The day also brings weekly data on initial unemployment claims as well as the Fed's report on industrial production and capacity utilization for October.
Wal-Mart Stores Inc is expected to report today on third-quarter results of US$0.60 per share, according to analysts polled by Thomson Financial. Its stock, which closed at US$46.47 on Friday, has traded within a 52-week range of US$42.31 to US$52.15.
Rival Target Corp will also post results, which Wall Street has pinned at US$0.55 per share. The discount retailer's shares closed at US$57.94 on Friday, and have traded within a 52-week range of US$44.70 to US$60.34.
Also reporting today is Home Depot Inc. Analysts expect the home improvement chain to report third-quarter earnings of US$0.75 per share. Shares closed at US$36.64 on Friday.