NEW YORK (
) -- Economic data next week will be viewed with an eye to the
as investors continue to anticipate another round of quantitative easing after the
Federal Open Market Committee's
next policy meeting in early November.
Confirming that current conditions warrant Fed action, Chairman Ben Bernanke assured the market on Friday that the central bank is carefully evaluating additional policy options to bolster the economic recovery. Speaking at a monetary policy conference in Boston, Bernanke added, "The Committee's actions are contingent on incoming information about the economic outlook and financial conditions" -- a caveat that ensures economic releases between now and Nov. 3 will continue to be watched very closely.
"Bernanke's speech basically confirmed what the market wanted to hear -- that there will be another round of quantitative easing, but they're still debating how much, and the economic numbers will determine that," said Peter Cardillo, chief market economist at Avalon Partners.
On Friday, news came that prices at the consumer level rose 0.1% and the underlying inflation rate remained unchanged in September, supporting the Fed's view that inflation pressures will remain muted for some time.
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September retail sales increased a stronger-than-expected 0.6% and were up 0.4% excluding auto sales, in line with what economists had expected. Meanwhile, October manufacturing activity in the New York region shot past expectations for a reading of 5.75 to 15.73, representing strong growth from September's level of 4.10. August business inventories largely met expectations with growth of 0.6%. The University of Michigan's first look at consumer sentiment in October, however, disappointed at 67.9, falling from 68.2 previously and missing estimates for a reading of 68.5.
"The news on consumer sentiment was a little sour, and that could factor into what the Fed may or may not do," Cardillo said.
Looking ahead to the coming week, Cardillo believes the September industrial production report on Monday and September's leading indicators on Thursday will likely be the biggest market movers -- along with the release of the Fed's Beige Book on Wednesday. The report, a compilation of anecdotal evidence on economic conditions across the Fed's 12 districts, is what the FOMC will reference during its Nov. 2-3 policy-setting meeting.
Economists expect a 0.2% uptick in September industrial production, after similar growth in August. Capacity utilization, which will also be reported on Monday, is slated to rise to 75%, from 74.7%, previously.
Tuesday's session brings September housing starts and building permits. Wall Street expects housing starts to dip to a 575,000 annual rate from 598,000 in the previous month. Building permits are also projected to fall: to a 565,000 annual pace from 569,000.
The Fed's October Beige Book will dominate market attention on Wednesday, and Thursday's lineup kicks off with the most recent data on labor markets in the form of initial weekly jobless claims data. According to
, claims are projected to fall to 455,000 in the week ended Oct. 16 from 462,000 previously.
Later on Thursday morning, the Conference Board issues its leading indicators index for September, which is expected to show growth of 0.3%, after a similar increase in August. Finishing off the week is a look at manufacturing activity in the Philadelphia region. Wall Street expects the Philly Fed number to climb back into positive territory for a reading of 1.4, after slipping to -0.7 in September.
In addition to economic news, the coming week will deliver a hefty dose of quarterly results as key financials, cyclicals and tech names are scheduled to report.
kick off the week with their results slated to come out before Monday's opening bell. According to
, analysts are looking for earnings of 6 cents a share and 55 cents a share, respectively.
results come out after the bell with expected EPS of $4.06 and $2.75, respectively.
Bank of America
will be Tuesday's early headliners with expected EPS of 16 cents and $2.28, respectively. After the close of trading,
is projected to report a profit of 15 cents a share.
Several airlines report on Wednesday, and
reports during the late session.
Big names on Thursday include
close out the week.
"I think the market will begin to focus not so much on the numbers, which will be OK, but more on what these companies have to say. That, combined with the economic data could result in a pullback," Cardillo said. "I do think the market is vulnerable to a pullback at this stage, but I think it could go up by the end of the year."
--Written by Melinda Peer in New York
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.