Investors will continue to sift through helpings of economic data in the coming week for signs that the

Fed

could be closer to increasing interest rates to stave off growing inflation. One of the most eagerly awaited numbers likely will be Friday's consumer price index.

"The market is very attuned to news on inflation and trying to put together any further early signs of acceleration. We're spooked about this now," said Jim Awad, president and market analyst at Awad Asset Management. Forecasts are calling for a 0.3% rise in April CPI on top of March's 0.5% increase. Excluding food and energy, core CPI is expected to rise 0.2%, down from the prior month's 0.4% increase.

"If

the CPI report shows again that inflation is accelerating, then people will say

interest rates will go higher," said Paul McManus, director of fundamental research at Independence Investments. In that case, stocks would react negatively, he said.

While McManus pointed out that the Fed has been clear that inflation is not yet a worry, he said, "What everyone is focusing on is when is the Fed going to raise rates and how much it is going to be. Every economic statistic is either going to lend evidence that the Fed is going to do something or it's not."

Sluggish Stocks

Particularly after Friday's

blowout employment numbers, investors are very concerned that the improving economy means interest rates will be raised in June. That worry translated into lackluster stock movement, which could remain the case in the early half of next week because the big economic reports don't begin until Wednesday.

The

Dow Jones Industrial Average

closed down 1.2% on Friday, while the

Nasdaq

dropped 1% and the

S&P 500

declined 1.4%. All three indices were down for the second week in a row. The Dow extended its losing-week streak to three in a row, down about 1% from the previous Friday's close. The S&P lost 0.8% in the week and the Nasdaq dropped 0.1%.

"It's an exhausted market," said Awad, who noted that stocks had a big run-up from March 2003 to January 2004. "That huge move accurately forecast the recovery in the economy in 2004, and the lethargy in the market since then predicts the uncertainty about 2005. We'll stay this way until the fuzziness comes into better focus."

Investors also will focus intensely on how high rates and inflation could impact stock valuation, which Awad predicted will cause the market to struggle until September.

Also contributing to the lack of the market's direction has been increased attention to Iraq, as reports have recently surfaced of American troops abusing Iraqi prisoners, which may not ultimately bode well for the Bush administration. Because Wall Street is largely Republican, the news is starting to hurt Bush, said Awad, who called it "a light weight around the market's neck."

Further, he said, "You run the risk of giving consumers, investors and business people a mild headache that you're always getting deaths in the background in Iraq."

Looking at the week's specific data points, Federal Reserve Chairman Alan Greenspan will speak at the Federal Reserve Bank of Chicago's Money Smart Conference in Chicago on Thursday at 11 a.m. EDT.

Wednesday's economic data include international trade numbers and import/export index numbers for March. The trade balance is expected to be a deficit of $42.6 billion, up slightly from a deficit of $42.1 billion in February. That same day, the federal budget for April will be released; analysts are expecting it to come in at $46.8 billion.

On Thursday, the producer price index for April comes out at 8:30 a.m. EDT. Economists are expecting a 0.3% increase from a 0.5% increase in March. Core PPI is seen rising 0.2%, compared to a 0.2% rise last month. April retail sales also will be released; the consensus is for a 0.1% increase on top of a 1.8% rise last month.

Besides the CPI figures on Friday, industrial production and capacity utilization of the manufacturing space will be released, with economists forecasting a 0.5% rise in production and a capacity utilization rate of 76.7%. March business inventories will be released as well, with the consensus calling for an increase of 0.4% from the prior month's 0.7% rise.

In addition, the University of Michigan's preliminary reading of May consumer sentiment is expected at 9:45 a.m. EDT on Friday; estimates are calling for a reading of 96.5, which would be up from April's reading of 94.2.

Aside from economic data, a slew of retail sector first-quarter earnings will be released, including reports from discount competitors

Wal-Mart

(WMT) - Get Report

and

Target

(TGT) - Get Report

. Meanwhile, tech bellwether

Cisco

(CSCO) - Get Report

will report earnings Tuesday.

Analysts are expecting Wal-Mart to earn 49 cents a share, up from 42 cents a share a year earlier. At Target, the consensus is for 47 cents a share, compared to 39 cents a share in the year earlier. Both companies report Thursday.

Other retail earnings reports next week will be from

May Department Stores

(MAY)

,

Federated Department Stores

(FD)

,

Kohl's

(KSS) - Get Report

and

Tiffany

(TIF) - Get Report

.