Traders will take measure of new
Chairman Ben Bernanke in the coming week as he steps out of Alan Greenspan's shadow and into the spotlight.
Bernanke is scheduled to speak in front of the
financial services committee on Wednesday in his first semiannual monetary policy report.
"Next week is Ben Bernanke's coming-out party," says Paul Mendelsohn, strategist at Windham Financial. "He pledged to be easier to read than Greenspan, so we will finally see if this is the case."
Mendelsohn believes investors are counting on the Bernanke-led Federal Reserve to buoy stocks by pausing its rate-hike campaign after its March meeting. The Fed has boosted the overnight lending rate 14 straight times, bringing it up to 4.5%.
The uncertainty over which way Bernanke will lean as he presents his first monetary policy report to Congress has created a lot of angst for traders and investors. But Randy Diamond, sales trader at Miller Tabak, says the uncertainty has also helped to create some much-needed volatility in the marketplace.
"Some believe that, if he stays the Greenspan course and is data dependent, the signs of strain on capacity will force the Fed to continue hiking rates to stem the forces of inflation," says Diamond. "Most likely, though, Bernanke will view the current 4.7% jobless rate as low enough to possibly add to inflation pressures. He said as much in a June 2003 speech, when he indicated that 5% was full employment."
Along with Bernanke's trip to Capitol Hill, the market will digest other news from Washington, as several economic numbers are set for release.
Retail sales figures for January arrive on Tuesday. Economists surveyed by Thomson First Call expect a rise of 0.8%, up from 0.7% in January. The retail sales figure that excludes autos is also expected to increase 0.8% after December's lackluster 0.2% rise.
"We would not be surprised by strong retail sales numbers in January," says Jason Schenker, economist at Wachovia. "And it would be nice to show strength in the economy after the weaker-than-expected fourth-quarter GDP." Last month, the Commerce Department reported 1.1% growth in gross domestic product, considerably lower than analysts' expectation for 2.8% growth.
Aside from Bernanke's appearance, investors also will be treated Wednesday to capacity utilization and industrial production data for January. Economists expect utilization to rise to 80.8% from 80.7% a month earlier. January industrial production, however, is expected to drop to 0.2% from 0.6% in December.
Housing starts for January are scheduled to be released before the bell Thursday. The expectation is for slightly more than 2 million new homes to be added, up from 1.93 million in December.
On Friday, the January producer price index is set for release, and the inflation measure should be a market mover. Economists anticipate the PPI will rise 0.2%, smaller than December's increase of 0.9%. January's core PPI, however, is expected to rise to 0.2%, compared with 0.1% in December.
"The PPI is important because it's the first piece of real inflation data of the year," says Mendelsohn. "And while the PPI has been rising, the CPI has not been keeping pace. Corporate America must be getting squeezed in the middle."
Still More Earnings
The new Fed chairman may be under the microscope in the coming week, but the slew of companies announcing fourth-quarter results will be scrutinized as well.
On Monday, the earnings lineup includes reports from the likes of
Bob Evans Farms
Valentine's Day may be on Tuesday, but Monday will be a big day for all that glitters when gold miners
Harmony Gold Mining
Companies releasing quarterly results on Tuesday include
Abercrombie & Fitch
( PLA) will be looking for love from investors on Valentine's Day. The publisher will bare its financial bottom line, with analysts looking for the company to earn 18 cents a share on $90 million in revenue.
Among companies reporting on Wednesday are
also takes the earnings stage Wednesday. According to First Call, analysts expect the computer maker to post earnings of 44 cents a share, up from 37 cents last year, on sales of $22.5 billion.
Retailers will be in the spotlight on Thursday, with both
reporting results for the key holiday period. Analysts are looking for Target to report earnings of $1.05 a share, up from the 90 cents earned a year earlier. For J.C. Penney, Wall Street anticipates earnings of $1.63 a share, up from $1.16 last year.
Other potential market movers scheduled to report Thursday include
( DCX) and H-P rival
And investors will certainly be tuning in Thursday when
XM Satellite Radio
( XMSR) announces both its results and guidance, especially after the company's announcement last week of a $55 million deal with Oprah Winfrey .
XM's chief competitor,
Sirius Satellite Radio
, highlights its quarter on Friday before the bell, along with