The interplay between oil and interest rates -- and a little bit of March Madness -- will be weighing on traders' minds in the coming week.
"To the stock market, bonds are clearly the new oil," says Randy Diamond, a trader with Miller Tabak. "The 10-year Treasury note's fluctuation above and below the key 4.50% level will likely push stocks to react accordingly -- which means inversely with the 10-year's yield."
Diamond expects the recent volatility in Treasury yields to stick around for at least two more weeks, until the
meets and the producer price index is released on March 22. Last month's announcement of a core PPI increase of 0.8%, the biggest jump since 1998, sent the market reeling.
Rising commodity prices have finally crept their way into Chairman Greenspan's consciousness, as evidenced by last week's beige book statement that "businesses continued to face rising input costs." And with the Fed getting itchy over inflation, some traders are beginning to think that the chairman might very well remove the word measured from the Fed statement at the March 22 meeting.
Just the possibility that the Fed could step up its rate-hiking plan will hold traders at bay next week, according to S&P market analyst Paul Cherney.
"The concern over inflation is spiraling," says Cherney. "That's going to make investors reluctant to make a two-fisted commitment to the long side."
The price of oil will continue to be a factor in next week's market activity, now that the commodity has grown comfortable in the low-to-mid-$50 range. Analysts are worried that if crude does not return to the mid-$40s it could threaten the spending power of the all-important consumer.
On the other hand, Bob Pavlik, portfolio manager at Oaktree Asset Management, says that rising oil prices are a double-edged sword because they also serve as an economic headwind that could keep the Fed on its "measured pace" of rate hikes.
Speaking of the consumer, February retail sales will be released on Tuesday. The consensus estimate is for an increase of 0.8%, reversing a decline of 0.3% in January.
Other major economic releases scheduled for next week are capacity utilization on Wednesday and the Philadelphia Fed Survey on Thursday.
February housing starts will be announced on Wednesday as well. Paul Nolte, market strategist at Hinsdale Associates, says he will be watching this number closely to see if the rise in interest rates will finally slow down the housing sector and, in turn, the homebuilders.
"Sooner or later, rising interest rates will slow down the homebuilders," says Nolte. "We will soon see if they are at the end of their run."
And just because we are only a few weeks from earnings warning season does not mean we are done with earnings.
On Monday, communications providers
report quarterly earnings after the market closes.
Communications tycoon John Malone will have a busy start to the week. The international part of his media empire,
Liberty Media International
, reports its fourth-quarter earnings on Monday, with Street analysts looking for the company to lose 3 cents.
On Tuesday, Malone's domestic holding company,
, will try to beat the Street's estimate of 5 cents a share, up from a loss of 32 cents last year.
Wall Street will be anxious to hear on Wednesday if rising bond yields weighed on brokerage house
first-quarter results. A big player in the debt markets, Bear is expected to earn $2.33 a share in the quarter, down from $2.57 last year.
Thursday will be a big day for tech as the Street hears from
And what's a more fitting way to kick off the NCAA tournament's first day of competition than to hear from
, which will be reporting results after the market closes Thursday, as well. The sneaker giant is expected to earn 98 cents, up from 74 cents last year. It will also be the first time the company will report financials without Phil Knight, the company's founder, who retired as CEO in January.