Coming Week: Rate Ripples

Forget about the lazy days of summer. End-of-quarter buying and high-profile economic data -- capped off by a Fed decision -- should rev up the markets as we reach midyear.

"The Fed is the main story next week, but it's not the only story," says John Silvia, chief economist at Wachovia. Like most economists, Silvia is expecting Alan Greenspan & Co. to raise overnight lending rates by 25 basis points to 3.25%, the ninth rate hike in a row since this time last year.

Consumer confidence numbers for June kick off the data parade on Tuesday. Economists are expecting a reading of 104, up from 102.2 in May.

On Wednesday, final GDP figures for the first quarter will be released. The consensus estimate is for growth of 3.5%, but there have been some rumblings that higher energy prices may put that number in jeopardy.

"The market will not take its eyes off oil next week," says Robert Pavlik, portfolio manager at Oaktree Asset Management. "As long as we are near $60 per barrel, traders are going to be concerned on its impact on growth going forward."

Thursday may be decision day for the Fed, but that announcement won't arrive until the afternoon. Traders need not worry, however, as there will be plenty of data in the meantime, including personal income and spending for May, initial jobless claims figures and the June Chicago PMI. Economists are expecting an increase in the Chicago PMI from 54.1 in May to 56 in June.

At 2:15 p.m. EDT on Thursday, the FOMC is due to release its interest rate decision and minutes.

"All eyes will be focused on Greenspan and whether he can continue to raise rates even with every economic indicator signaling a downturn," says Rich Yamarone, chief economist at Argus Research.