Wall Street will take its cues from Washington in the coming week, as the Fed unveils its interest rate plan in the wake of Hurricane Katrina.

"Next week's economic calendar is light so the focus is clearly on Tuesday's FOMC meeting," says Randy Diamond, sales trader at Miller Tabak.

At their first meeting since Katrina ravaged the Gulf Coast, Federal Open Market Committee members will assess the storm's impact on the economy and decide whether the damage will keep them from lifting overnight lending rates for an 11th straight time. Most traders seem to believe it won't, as rate-hike odds have moved over 90%, according to fed funds futures.

The first measure of consumer attitudes in the post-Katrina environment wasn't pretty. The University of Michigan reported Friday that its consumer sentiment index plunged to a 13-year low of 76.9 in a preliminary reading on September, from 89.1 recorded for August. Economists on Wall Street were expecting a milder drop, to 85.

Investors were already nervous about the strength of consumer spending going into the back half of 2005, as oil prices soared and retailers lowered expectations in their second-quarter earnings reports. Those concerns were exacerbated by the economic impacts of the hurricane, which caused even larger spikes in gas prices and prompted economists to cut estimates for employment and economic growth.

While the Fed cares about consumer spending, its main target is inflation, which was creeping up due to higher energy prices even prior to Katrina. The Labor Department's August consumer price index, released last Thursday, showed headline inflation rising 0.5%, thanks to surging energy prices. Stripping those out, the so-called core CPI rose a more benign 0.1%.

"Look at gold reaching a 17-year high, the steepening yield curve and the fact that TIPS outperformed Treasuries," says Diamond. "The signs for the Fed are there."

Wachovia economist John Silvia is also viewing the spike in gold prices as further evidence that the "risk of inflation is to the high side."

"The Fed may not say that inflation is gaining strength, but they are definitely thinking it," says Silvia, who expects another 25 basis-point rate hike.

Brokerage Earnings Boom

The stream of quarterly earnings reports picks up in the coming week, especially in the brokerage sector. And, of course, earnings warning season starts, which will keep traders on their toes.

The market will hear on Monday from the likes of Steelcase ( SCS - Get Report) and Carnival ( CCL - Get Report).

Nike ( NKE - Get Report) also reports on Monday. Analysts expect the sneaker manufacturer to earn $1.42 a share, up from $1.21 last year, on $3.8 billion in revenue.

On Tuesday, companies reporting quarterly results will include Circuit City ( CC - Get Report), H.B. Fuller ( FUL - Get Report) and Christopher & Banks ( CBK).

Brokerage company earnings continue Tuesday with Goldman Sachs ( GS - Get Report) taking center stage. The company is expected to earn $2.29 a share, up from $1.74 a year ago, on revenue of $5.61 billion.

Among the companies reporting Wednesday are Bed Bath & Beyond ( BBBY - Get Report), AutoZone ( AZO) and FedEx ( FDX - Get Report).

Morgan Stanley ( MWD) will also be reporting earnings on Wednesday. It will be Morgan's first earnings update since John Mack took the helm of the company earlier this summer.

Companies reporting earnings Thursday include 3Com ( COMS), A.G. Edwards ( AGE) and Oracle ( ORCL).