Consumers and the prices they pay will be tattooed on traders' minds in the coming week as the market digests inflation data and retailer earnings.
"The biggest item affecting trading next week will be the consumer price index, because everybody wants to determine how far the
will go," says Gina Martin, economist at Wachovia. "And the forward forecasts of the retailers are worth watching as well, because consumers are going to face greater constraints this year due to higher interest rates and a slowing housing market."
The markets will be closed on Monday in honor of Presidents Day. On Tuesday, economic data begin to pour in, starting with the leading indicators for January. Economists surveyed by Thomson First Call are looking for an increase of 0.5%, up from 0.1% in December.
Also on tap for Tuesday is the release of the minutes from the January Fed meeting, which was the last gathering with Alan Greenspan at the helm before Ben Bernanke assumed the top spot.
"Ben Bernanke did not say anything out of the ordinary when he was in front of Congress so
the minutes still merits our attention," says Robert Pavlik, chief investment strategist for Oaktree Asset Management. "And even more importantly, we need to see what the other Fed members were thinking in terms of inflation."
The biggest economic number of the week will be January's consumer price index, set for release Wednesday at 8:30 a.m. Economists are expecting a jump of 0.5% in the CPI, a big reversal from December's drop of 0.1%. The core CPI, which excludes food and energy, is expected to remain flat from the prior month at 0.2%.
"Everybody has inflation on the brain, especially after last week's PPI," says Larry Wachtel, senior market analyst at Wachovia. "Inflation levels seem to be encroaching on Bernanke's comfort range, so it has become clear that the Fed is no longer 'one and done.'"
On Friday, the Labor Department said the seasonally adjusted producer price index for January rose by 0.3%, above estimates for a 0.2% rise. The core number rose by 0.4%, double what Wall Street had estimated.
Jobs will be the focus on Thursday, with the help-wanted index for January set for release at 10 a.m. Economists anticipate the index will rise to 40 from the prior month's reading of 39. Initial jobless claims for the week ended Feb. 18 also will be released.
Durable goods orders for January will be Friday's sole economic release. Economists anticipate a negative 0.3% reading, which would be a steep drop from December's increase of 1.8%.
"The durable goods number will matter more to industrial stocks like
," says Pavlik. "People want to see if the growth in this sector is continuing, but they don't want it growing so fast that it will scare the Fed."
Retailer reports for the all-important holiday quarter dominate the coming week's earnings lineup.
"We say it again and again, but it's true that everything depends on the consumer, since around 70% of our economy is based around consumer spending," says Wachovia's Wachtel about the retail-heavy earnings week.
The onslaught begins, fittingly, with the world's largest retailer.
reports its fourth-quarter results Tuesday before the market opens. Analysts surveyed by Thomson First Call expect the company to post earnings of 83 cents a share on $90.5 billion in revenue. Wal-Mart earned 75 cents a share a year earlier.
Another big-name retailer,
, also is set to report Tuesday. The market also will see results from
Retailers on tap for Wednesday include
Away from the retail sector, Wednesday also will have reports from the likes of
On Thursday, the market will hear from
And back at the cash register, the retail lineup for Thursday includes
Among the companies reporting results on Friday are