The potency of consumers -- and the prices they pay -- will be the market's focus in the coming week as retail and inflation data dominate the headlines. "Next week we're going to get an inkling about how merry this Christmas is going to be," says Rich Yamarone, chief economist at Argus Research. On Tuesday, the October producer price index, a key inflation measure, will be released. According to Thomson First Call, economists anticipate a rise of 0.1% in the PPI, less than the 1.9% jump in September. The core PPI, which excludes food and energy, is expected to rise 0.2%, down from 0.3% the prior month. Retail sales for October are also on tap for release Tuesday before the bell. Economists predict sales to have fallen 0.6% for the month, compared with a rise of 0.2% in September. Paul Mendelsohn, strategist at Windham Financial, says the number will be critical since retailers have been attempting to bring in holiday shoppers early this year. "The retail strategy has been to rope shoppers into spending their holiday dollars before they realize the pinch from higher energy prices," says Mendelsohn. "And next week we will see if that plan has been effective." Additional inflation data arrive on Wednesday, when the October consumer price index is released. Economists are looking for the index to rise 0.1% after a sizable 1.2% jump in September. The core CPI, however, is expected to double to 0.2% from 0.1% the prior month. "The top-line CPI and PPI numbers should dip with the drop we saw in oil prices last month, which should give the market a chance to keep the rally going," says Mendelsohn. Homebuilding returns to the forefront on Thursday, when housing starts and building permits for October are announced. According to Thomson First Call, the consensus estimate is for 2.06 million new-home starts, compared with 2.1 million in September.
Also slated for release Thursday are capacity utilization and industrial production data, as well as the Philadelphia Fed survey. Finally, traders say one of the most important events for next week will be the confirmation hearing for Fed Chairman Alan Greenspan's replacement, Ben Bernanke. "This marks the beginning of the power shift, as Bernanke's words will be taken as seriously as Greenspan's from here on," says Randy Diamond, sales trader at Miller Tabak.
Among the companies reporting Wednesday are D.R. Horton ( DHI), PetsMart ( PETM), Medtronic ( MDT) and Tyco ( TYC). Applied Materials ( AMAT) also will report earnings on Wednesday. Analysts expect the chip-equipment maker to earn 14 cents a share, down from 27 cents last year, on $1.63 billion in revenue. Retailers dominate once again on Thursday, with companies including Barnes & Noble ( BKS), Gap ( GPS) and Nordstrom ( JWN) issuing reports. Hewlett-Packard ( HPQ) will also be reporting earnings Thursday. According to First Call, analysts project the computer hardware company will post earnings of 46 cents a share and $22.7 billion in revenue. The earnings schedule is light on Friday, but AnnTaylor Stores ( ANN) rounds out the retailer reports for the week. Analysts expect the women's clothier to post earnings of 37 cents a share and revenue of $518 million.