Corporate US' strong profits helped drive the Dow Jones industrials past 13,000 for the first time last week, but investors will want to see if US consumers also have financial muscle before pushing stocks much higher.
In addition to more earnings data, market participants will be examining this week's data on personal spending and the job market. Now that the Dow has gained more than 760 points since last month began, some investors are proceeding cautiously -- upcoming data showing the economy is slowing too quickly or that inflation is getting out of control could trigger a sell-off. High inflation keeps the Federal Reserve from lowering interest rates, which would boost spending.
Wall Street remains optimistic: first-quarter earnings data have shown about two-thirds of Standard & Poor's 500 companies beating analyst estimates and most economic data have presaged cooling growth but not recession.
Even a lower-than-expected reading on first-quarter GDP failed to stifle the Dow's climb on Friday and the blue-chip index hit its 37th record close since October.
The Dow was up 1.23 percent for the week; the S&P 500 index was up 0.65 percent; and the NASDAQ composite index was up 1.22 percent.
Yesterday, the Labor Department reports on personal spending, income and core personal consumption expenditures inflation -- a gauge of cost of living.
The market expects that personal income for March rose 0.6 percent, the same as February; personal spending rose 0.4 percent, lower than the 0.6 percent in February; and core PCE inflation was 2.1 percent year-over-year, down from 2.4 percent the previous month, the median estimate of economists surveyed by Thomson Financial showed.
Later, on Friday, the Labor Department will report on nonfarm payrolls and unemployment. Economists forecast that nonfarm payrolls rose by 135,000 last month, less than 180,000 in March and that the unemployment rate rose to 4.5 percent from 4.4 percent.
In addition to personal spending and income, investors yesterday were to look at the Chicago Purchasing Managers Index of regional manufacturing and the Commerce Department's construction spending report.
Economists expect last month's Chicago PMI to have fallen to 52.0 from 61.7 in March, and March construction spending to edge up 0.3 percent after a similar gain in February.
Today, the Institute for Supply Management will release its index on US manufacturing. Economists expect last month's index to come in at 51, indicating slow expansion. Also today, the National Association of Realtors will report on pending sales of existing homes in March and automakers will release last month's sales figures.
Tomorrow, the Commerce Department will report on factory orders, which the market is expecting to have risen 1.0 percent in March, after a similar gain a month earlier.
Thursday, the Labor Department will release its measure of worker productivity, and the Institute for Supply Management will release its service sector index.
Economists forecast that productivity rose 1.1 percent in the first quarter, less than the 1.6 percent gain in the fourth quarter. They expect the ISM's service sector index last month to register at 53.5, suggesting slightly faster growth than March's reading of 52.4.
So far, 22 of the 30 Dow components have reported earnings and 16 of those have beat expectations. This week, three more Dow component companies will release results from the latest quarter: Verizon Communications Inc, Procter & Gamble Co and General Motors Co.
Yesterday, analysts predicted Verizon would post a profit of US$0.54 a share. The stock closed on Friday at US$37.89, at the upper end of its 52-week range of US$29 to US$38.77.
Today, the market expects Procter & Gamble to report a profit of US$0.74 a share.
The stock closed last Friday at US$62.98, in the upper half of its 52-week range of US$52.75 to US$66.30.
On Thursday, General Motors is expected to release results showing a profit of US$0.87 a share.
The stock closed on Friday at US$31.56, in the upper half of its 52-week range of US$22.29 to US$37.24.
Other major companies releasing quarterly financial results this week include Time Warner Inc, CBS Corp and Eastman Kodak Co.
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