Coming Week: Shoppers Flop

On Thursday, Fed chairman Ben Bernanke will testify before the Senate Banking Committee to answer questions about the U.S. economy and the state of the U.S. financial markets. That same day, the government is expected to report that the U.S. trade deficit amounted to $61 billion in December, down some from the $63.1 billion deficit reported for November. It will also report increases in U.S. import and export prices.

On Friday, the Fed is expected to report that U.S. industrial production ticked up by 0.1% in January after being flat in December. Also, the University of Michigan is expected to report that the preliminary reading of its consumer sentiment index dropped to 76.5 in February from 78.4 in January, mirroring gloomy results from the Conference Board's consumer confidence index in January.

"Looking ahead, consumers are quite downbeat about the short-term future and a greater proportion expect business conditions and employment to deteriorate further in the months ahead," said Lynn Franco, director of the Conference Board Consumer Research Center, in its release from late January. "In addition, the percentage of consumers anticipating an improvement in their earnings has declined and could potentially impact spending decisions."

Teen apparel chain Abercrombie & Fitch(ANF Quote) will be an early earnings reporter from the retail sector on Friday. Thomson reports that apparel retailers are expected to post a 4% increase in earnings for the fourth quarter, but department store chains are headed for a 17% drop, while general merchandisers are expected to dip 4%.

In the end, the week will conclude on an options expiration day, which could add to high trading volatility in the market. Traders also may be hesitant to hold positions on Friday before retiring for a three-day President's Day weekend. Last time the U.S. took a Monday off to honor the legacy of Martin Luther King, Jr., global stock markets went into a tailspin.

"The market right now is in a situation where the buyers are just not there with confidence," says Chris Johnson, chief investment strategist with Johnson Research Group. "The one big question mark here is how strong the consumer is going to remain, and quite frankly, that's the thing that market is hanging its hopes on."