Investors will be checking out the consumer again this week as retailers -- big and small, upscale and downscale -- take their turn in the earnings parade.
Along with the busy earnings slate, expect some important economic data. Topping the list will be April's housing starts number, due Tuesday morning, and the consumer and producer price index reports later in the week. Those figures should help Wall Street get a better read on the strength of the economy and the
But for now, in the wake of last week's latest disappointment at
, the health of the U.S. consumer is front and center.
"All eyes will be watching the retail sector very closely next week," said Paul Mendelsohn, chief investment strategist at Windham Financial Services. "The March sales data were good, but the stocks have not been performing well, especially after Wal-Mart reported disappointing earnings."
Indeed, the Bentonville, Ark.-based titan took some starch out of May's brief retail rally Thursday by
posting soft quarterly numbers and guiding toward more of the same. Solid results at rival
suggested the problem could lie more with Wal-Mart than with the retail sector at large, but this week's earnings should firm up the evidence one way or another.
On Monday, retailers
are due to report first-quarter results. Analysts expect Lowe's to earn 76 cents a share, up from 57 cents last year, on revenue of $9.99 billion. Wall Street expects Limited, the company behind the Victoria's Secret and Bath & Body Works chains, to make 10 cents a share, down from 13 cents last year, on $1.98 billion in sales.
Breaking out of the mall for a moment,
will post its fiscal second quarter on Tuesday afternoon. The report will be the first quarterly earnings announcement under CEO Mark Hurd, who replaced Carly Fiorina earlier this year. Analysts expect the printer giant to earn 36 cents, up from 34 cents a year ago, on sales of $21.3 billion.
The retail roundup continues on Wednesday with earnings reports from
. And don't forget pets -- they have to shop too, apparently.
reports earnings on Wednesday as well. Analysts expect the company to make 22 cents, down 2 cents from last year, on $892 million in sales.
Still more retailer earnings are on tap for Thursday, including
Ann Taylor Stores
Some important economic indicators are on tap as well.
"With all of the economic data coming out, I expect trading to be pretty choppy as investors digest what the data really means," said Robert Pavlik, portfolio manager at Oaktree Asset Management.
The Empire State Index, which provides an in-depth look at New York's manufacturing sector, is first up to bat on Monday.
Tuesday should be the busiest day for economic releases. With the talk of a housing bubble lately, Richard Yamarone, chief economist at Argus Research, will have an eye on the housing starts number. After a disappointing March number, the consensus is for 1.98 million new residential units under construction.
"Housing starts will be particularly important this month because it will show if a soft patch in the housing climate is upon us, or if the slump in March was just a minor blip," says Yamarone. He does not believe the sector has hit a soft patch.
Also on Tuesday will be the release of the industrial production number. This could solidify the recent weak ISM and Fed Regional Survey data, according to Yamarone. The consensus is looking for a 0.1% rise.
We will also find out what producers are paying for their goods and whether they've been able to pass their costs on to the consumer in the April producer price index. The consensus estimate for the PPI is for an increase of 0.4%. The PPI will be followed on Wednesday by the consumer price index, followed by the Philadelphia Fed Survey on Thursday and of course the weekly jobless claims.
On Friday, Greenspan is speaking to the New York Economic Club on energy prices. All in all it's looking like an eventful five days.
"This week of economic data will give us a better understanding of the health of the economy right now and to see if there are any trends developing," said Pavlik. "It will also paint a better picture of what the Fed will be thinking and what they will do heading into their next meeting."