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Updated from 02/12/11

Updated to include weekend developments in Egypt and Algeria.



) -- Although the crisis in Egypt has been somewhat defused following the

resignation of President Hosni Mubarak, developments in the region over the next few days could still have important implications for the markets, according to analysts.

Geopolitical risks continue to be a concern as investors wonder whether the success of citizens of Tunisia and Egypt in overthrowing their governments may drive other countries in the Middle East to also go the route of rebellion, prolonging instability in the region.

So Wall Street will be looking for signs of normalcy returning to Egypt over the weekend, according to Doug Roberts, chief market strategist of Channel Capital Research. "If things die down and everybody goes back to work then the contagion effect might die down," said Roberts. "The crisis in Tunisia spread to Egypt. Next might be Libya. But if things die down, we can say we have stuck that genie back into the bottle."

Phil Orlando of Federated Investors said Friday that while Mubarak's resignation somewhat tamped down the likelihood of a contagion, the situation remained fluid. "A lot depends on the military response to the situation in the next few days," said Orlando. "Are we going to see a military dictatorship? Or will the military say it is just helping the transition and will conduct an election in the next 30 days?"

Over the weekend, there were indications that the country might be on a stable path toward a new democratic government. Egypt's new military rulers Saturday reportedly

pledged to oversee a peaceful transfer of power

to an elected government and to help build a democratic nation. And on Sunday

they dissolved the nation's parliament and suspended the constitution

, satisfying two key demands of prodemocracy protesters, the

Associated Press


However, the weekend also saw antigovernment unrest elsewhere, as thousands of people in Algeria violated the government's ban on public protests and Saturday marched in the capital, Algiers, demanding democratic reforms, the

Associated Press


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The question of who will lead Egypt next is an important one for the markets as the county has played a key role in preserving stability in the Middle East. The Mubarak government was an ally of the U.S. and had been an anchor for the policies of Israel and Saudi Arabia as well.

Although developments in the Middle East will influence crude oil prices and perhaps the dollar, several economic data points are also on tap next week that will merit watching. Earnings reports will also continue to drive stock-specific action.


Dow Jones Industrial Average

rose 1.5% over the week to 12,273, its highest level in more than two and a half years. The

S&P 500

and the

Nasdaq Composite

also surged by 1.4% each.

Stocks have been moving steadily upward, with the Dow closing higher in 10 of the last 11 weeks, prompting several market experts to call for an overdue correction. U.S. equities have attracted strong inflows in the last several weeks as investors bet on a speedier recovery in developed markets. Inflation in emerging markets has also been a mounting concern, leading investors to book some of their profits in the BRICs and other markets after two years of substantial gains.

Still, investors will be looking at economic data such as retail sales, core PPI and CPI, and initial jobless claims for signs that the U.S. recovery is on track with expectations.

On Tuesday, the Commerce Department is expected to say that retail sales for the month of January rose 0.5% after rising 0.6% previously, according to estimates from

. Excluding auto segment, retail sales are likely to have climbed by 0.6%.

"The retail sales report will definitely close the books on Christmas. Christmas has become a three-month affair. People redeem their gift cards in January and retailers recognize gift cards only when they are redeemed," said Orlando of Federated Investors. He expects that retailers probably had their best Christmas season in five years.

Retailers begin reporting their results next week as well, with


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Abercrombie & Fitch

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among the first to report.

Empire manufacturing and business inventories data are also slated for release on Tuesday. Wednesday brings the latest reads on PPI, housing starts and industrial production, as well as the minutes of the Fed's January policy meeting. Last month, the Fed unanimously voted to maintain QE2. Investors will be looking for any statements indicating how the Fed plans to wind down QE2.

On Thursday, initial claims and CPI data will be the crucial indicators on jobs and inflation, two of the Fed's biggest concerns. The Philadelphia Fed survey on manufacturing will be the other major data point.



will be a stock to watch Monday. The book retailer is expected to file for bankruptcy on Monday or Tuesday.




is also expected to announce that it will merge with the

Deutsche Boerse

. The deal could face regulatory hurdles, but it's already thrown the spotlight on the potential for consolidation among the other exchanges including the


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Nasdaq OMX





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cash offer to buy



at $69 per share is set to expire on Feb. 15.


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BHP Billiton

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(DE) - Get Free Report

are the big names to report next week. Farmer incomes are rising as crop prices soar. That in turn is expected to increase the demand for farming equipment. Deere forecast first-quarter sales would jump 34% from last year. Through all of fiscal 2011, Deere expects to generate $2.1 billion in net income.

Several energy companies are set to report next week, including


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, which gets between 20% and 30% of its revenue from Egypt,

Devon Energy

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Cliffs Natural Resources

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EOG Resources

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MGM Resorts

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Sirius XM

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Tesla Motors

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are among the other prominent companies slated to report.


Written by Shanthi Bharatwaj in New York


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Shanthi Bharatwaj


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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.