Economic data steps back into the spotlight in the coming week, with three numbers -- durable goods orders and two readings on consumer confidence -- that have historically done well moving the market. But traders looking for the inauguration of a major uptrend in stocks are likely to be disappointed.

Economic data will likely contribute to a volatile atmosphere as the market views and reacts differently to each statistic, said Paul Nolte, director of investments at Hinsdale Associates. But it will be hard for a decisive sentiment switch to take hold given investors' stubborn preoccupation with interest rates, inflation, oil prices and the war in Iraq.

Indeed, the year's early bullishness has been almost entirely superceded by lethargy, as geopolitical issues have come to the forefront, said Steven Weiting, senior economist at Citigroup Global Markets. "I don't have the sense that the

economic data will have a real material impact. We're at that point where we have another couple months here until the hand off of sovereignty in Iraq," he said. "The war and what's going on in the oil markets is really paramount to market sentiment."

As a result, each economic report will be scrutinized for implications of energy prices. On Friday, oil prices moved just below $40 a barrel for the first time in two weeks, after touching a record $41.55 a barrel earlier.

High oil probably dooms stocks to a summer-long holding pattern, Nolte predicted, especially in an election year. "The markets don't do all that well until August and September in an election year," he said. "What we're seeing is a stereotypical election year -- a lousy first part," and then a pickup in the last four months.

In the just completed week, the

Dow

extended its losing streak to five in a row, down about 0.5% from the previous Friday's close. The

S&P 500

fell for a fourth week, losing 0.2%, while the

Nasdaq

gained 0.4%.

Durable goods orders, consumer confidence and initial jobless claims are the top three readings on economist Jon Lonski's list for next week. Although durable goods orders are expected to show a decline on Wednesday, that is not necessarily a bad sign, said Moody's Lonski. The consensus estimate is for a 0.8% drop, compared to a 3.4% increase in March.

"You almost have to have this category decline," Lonski said. "I could argue it drops by 2%. Even that and we would still have durable good orders expanding at 23% annualized, comparing the three months ended April with the three months ended January 2004 ... It's almost inevitable. The inevitability stems mostly from its almost unsustainable height."

If durable goods drop more than expected, that "would help to offset worries stemming from the latest energy price surge as well as the expectation of an approaching episode of a

Fed

tightening," said Lonski.

Unfortunately, because the durable goods number is so "squirrelly," said Nolte, it is difficult to predict how the market will react. "It is a notoriously volatile number," he said.

Meanwhile, the Conference Board's reading of consumer confidence will be released on Tuesday, while the University of Michigan's consumer sentiment index is out on Friday. Each is expected to rise slightly from previous readings, with consumer confidence seen at 94, up from 92.9 in April, and consumer sentiment pegged at 94.6, compared to a prior reading of 94.2.

The numbers are important because they are an indication of how consumers are responding to rising energy prices, said Lonski. "If the consensus is fulfilled, then this has been an energy price hike that has yet to materially damage the U.S. economy."

But Lonksi would not be surprised to see the Conference Board's reading drop to 88 or 89 and for Michigan sentiment to dip as well. "The equity market has been saying the higher energy prices are going to be damaging to the economy. So why shouldn't the higher prices give consumer confidence a haircut?"

Lonski will also be watching the initial jobless claims figures released on Thursday because of the prior week's spike to 345,000. Analysts have projected 334,000 claims for the week ended May 22. Via the reading, Wall Street will be better able to ascertain whether increased energy prices have affected the business sector, said Lonski.

Personal income and spending are released on Friday. Economists expect a 0.5% increase in personal income from a 0.4% rise in April, while consumption is seen up 0.2%, from a 0.4% increase in the prior month.

Although retail sales declined 0.5% in April, they are still up 8.3% from February to April, a sign that consumers are continuing to spend -- a good sign for the personal income reading.

There will be a few key earnings reports out next week, including

Novell

(NOVL)

on Monday;

Vodafone

(V) - Get Report

and

Krispy Kreme

(KKD)

on Tuesday;

AutoZone

(AZO) - Get Report

on Wednesday; and

Costco

(COST) - Get Report

and

Vivendi Universal

(V) - Get Report

on Thursday.