Fed, Retail Key in Coming Week

Investors will focus on Tuesday's meeting of Federal Reserve policymakers, as well as retail statistics and earnings reports due out next week.
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NEW YORK (

TheStreet

) -- Market observers are looking for something (anything!) to goad the market. But the last potential catalyst --

a mixed-to-depressing July jobs report

-- poured cold water over any hopes, leaving experts scrambling to find something to focus on in what one trader called an "uninspiring" coming week.

Stocks sold off Friday

after the government reported that 131,000 jobs were lost last month, while the private sector created an underwhelming 71,000 positions. The shortfall will surely increase interest in Thursday's weekly initial claims figures, which are predicted to decline after

racing higher last week.

For Jim Paulsen, chief investment strategist at Wells Capital Management, the report left questions open, with little opportunity for answers in the short term. But many market participants are already pivoting to Tuesday's statement from the

Federal Open Market Committee

, as they always do. Commentators have speculated that deteriorating economic indicators may prompt the Federal Reserve to pounce, raising the specter of another bout of quantitative easing.

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But Paulsen and others are less convinced of the statement's import this go around.

"I get the feeling sittin' here that we're in the same place we were prior to the

jobs report," Paulsen said. "It isn't bad enough to move the Fed off the dime, but it isn't good enough to settle questions about the state of the recovery. It's so frustrating. Every month you think we're going to clear something up and then it just never quite arrives.

"I know you're supposed to say it's a big deal. I get that. I'm sure there's going to be market volatility around its release," Paulsen added later. "But as far as its lasting impact of importance to me, it just isn't, unless they do something shocking, which I just don't see. I just can't see them restarting

quantitative easing again on the basis of what we got here according to data. About the only thing you see them doing is giving more lip service to weakness."

Michael James, managing director at Wedbush Morgan Securities, said it's hard to envision the Fed announcing anything extraordinary on Tuesday, given the lack of appealing options.

"I think their hands are somewhat tied in terms of their ability to do anything to gainfully alter their current strategy," he said, while envisioning a tight trading pattern in the near term. "I don't think people have much expectation for them to change what they've been doing for some time. I think that's why the market's been unable to have any type of sustainable up move other than from oversold levels."

"Where can the Fed really ease any further than they have," James asked later. "So, to have those expectations, I think, is unrealistic and to have overly optimistic economic or equity market expectations is unrealistic given the jobs backdrop."

As a result, price action in the coming week may warrant even more focus, as investors ponder if the

S&P 500

can hold above its key technical level at 1,100.

"Not only with markets as a whole, but the entire character of the financial markets," Paulsen said. "Do commodity prices rally? Do cyclicals start to lead again? Do 10-year yields blow through 2.80% or 2.70% or do they back up again towards 3%? It'll be interesting to see, because that might be more telling near term -- what the financial markets, in their infinite wisdom, are picking up, if you will. That's one thing I'll be watching, maybe even more than the economic reports."

Among the sectors, the consumer space will garner the most interest by far as a flood of statistics on various fronts will reveal buying and sales trends. After the market digested an unsteady diet of

same-store sales figures last week,

retail sales will again be front and center Friday when the Commerce Department unveils its own July figures. Retail sales are projected to grow 0.5% after slipping modestly in June, according to consensus estimates provided by Briefing.com.

The emotional state of the buying public will also be in focus Friday when the University of Michigan consumer sentiment index for August is released. Estimates are calling for the temperament gauge to rise to 70 this month after registering 67.8 last month.

Earnings season is dying down, but name retailers like

Macy's

(M) - Get Report

,

Kohl's

(KSS) - Get Report

,

Nordstrom

(JWN) - Get Report

and

JC Penney

(JCP) - Get Report

are scheduled to release their quarterly assessments throughout the week.

"I guess, my sense is, a big focus of next week is going to be anything spending or retail related," Jack Ablin, chief investment officer at Harris Private Bank, said. "Again, the theme is 'will disappointing job growth continue to weigh on spending?' If we continue to get disappointments in retail, than that confirms that this missing puzzle piece of jobs is throwing a monkey wrench into our recovery."

Fires fueling deflation worries could be fanned (or not) come Friday when the government gives indications whether prices at the consumer level ran higher or lower in July. The Labor Department's consumer price index is expected to jump 0.2%, while its core reading is believed to have edged higher by 0.1%. But Paulsen at Wells Capital noted that the CPI's core gauge has picked up somewhat in recent months. If that trend continues in this latest read, he said, it could stoke new fears of inflation "that's going to really affect market mindsets."

In other economic reports, government productivity figures will come out Tuesday, followed by trade and budget deficit reads Wednesday, import and export prices on Thursday, and business inventories on Friday.

Blue-chip entertainment firm

Walt Disney

(DIS) - Get Report

, tech outfits

Cisco

(CSCO) - Get Report

and

NVIDIA

(NVDA) - Get Report

, along with solar names like

Sunpower

(SPWRA)

and

LDK Solar

(LDK)

are scheduled to report, though the week lacks big-name sizzle otherwise.

But price movements in shares of

Hewlett-Packard

(HPW)

will probably be intensely watched Monday after a late-breaking Friday report said

CEO Mark Hurd

resigned amid sexual harassment allegations.

Over the weekend, reports emerged that Hurd last week

settled the sexual harassment allegations

that eventually led to his ouster.

-- Written by Sung Moss in New York