The Coming Week: More War Uncertainty - TheStreet

Investors head into a holiday-shortened week with no more clarity on the war and terrorism question than they had last Monday -- maybe less, after Hans Blix and Colin Powell's mixed messages at the U.N. Analysts say that spells more choppy trading with a continued downside bias.

"It's just difficult to tell clients to get in right now. I believe the market is undervalued and this could be a buying opportunity, but sentiment continues to be weak. So I'm not anxious to jump in ahead of time," said Joseph Kalinowski, chief investment officer at Ehrenkrantz King Nussbaum.

On Friday, U.N. chief weapons inspector Hans Blix told the Security Council that Iraq still has forbidden missiles and has not reported all its illegal weapons. Blix also suggested he needs more time to evaluate whether the nation has in fact complied with U.N. demands to disarm.

That sent the

Dow

up about 160 points to 7908, giving the blue-chip average a 44-point gain on the week. The

Nasdaq

shot up 33 points on Friday to 1310, leaving it up about 28 points over the five sessions.

"Apparently, Iraq is going along with inspections, which puts us back into a hiatus period of waiting to see what will happen. I see more uncertainty this week. And there's nothing worse for stocks than uncertainty," said Daniel Morgan, fund manager at Noble Financial Group, in Florida.

On the economic front, traders will have one eye on the January Producer Price Index, which comes Thursday and is expected to show a 0.4% increase, compared with a flat reading in December. Also on Thursday, a government report could show the Leading Economic Indicators had a 0.1% rise in January, according to economists. On Friday, the market will be watching the Consumer Price Index, which is expected to have climbed 0.3% in January, above the 0.1% increase a month earlier.

In corporate earnings, retailers will be the focus next week.

Wal-Mart

(WMT) - Get Report

, the world's largest retailer, is expected to report Tuesday it earned 56 cents a share in its fiscal fourth quarter, while analysts estimate

J.C. Penney

(JCP) - Get Report

will post a profit of 66 cents a share on Thursday.

Automaker

DaimlerChrysler

(DCX)

will report its earnings on Wednesday, as well as wireless carrier

Nextel Communications

(NXTL)

.