Earnings from big companies such as Intel Corp. and Pfizer Inc., as well as key inflation reports, will help determine whether U.S. stocks will continue to skid lower or bounce back this week.
Today kicks off one of the heaviest weeks of the quarterly earnings season. Some of the other companies slated to report include General Motors Corp. and Ford Motor Co., Internet companies EBay Inc. and Yahoo Inc., financial heavyweight Merrill Lynch & Co. and soft-drink giant Coca-Cola Co.
"Earnings are starting to dominate the market," Rick Meckler, president of investment firm LibertyView Capital Management, said Friday. "The bigger names are going to set the tone for their sectors."
Last week, the Dow Jones industrial average suffered its worst weekly decline since March 2003, down 3.57%. The broader Standard & Poor's 500 index and the Nasdaq composite index had their biggest weekly drops since August 2004, 3.27% and 4.56%, respectively.
Data released last week cast more doubt on the health of the U.S. economy, which will place added importance on the financial outlooks that companies give next week.
Investors will scour data on consumer prices and producer prices this week for any signs of inflation, strategists said.
The U.S. producer price index for March is due Tuesday, and economists expect a 0.2% gain for the core figure, which excludes food and energy. The consumer price index for March is due Wednesday, with a rise of 0.2% expected for that core figure, according to economists polled by Reuters.
"What will really capture the attention of investors will be the monthly inflation reports," said Anthony Chan, managing director and senior economist of J.P. Morgan Asset Management.
"There is still some lingering fear of inflation, even though equity market investors have diversified their fears somewhat and are also now looking at the possibility that the economy is not doing as well."
With the health of the U.S. economy in focus, investors are likely to watch the leading economic indicators for March, which are due Thursday, Chan said.
Other economic data on tap this week include March housing starts Tuesday. Investors will watch them to see whether higher interest rates are damping consumers' appetite for real estate, strategists said.
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The Week Ahead
* Quarterly earnings released by 3M Co., Bank of America Corp., Eli Lilly & Co., Hasbro Inc. and Texas Instruments Inc.
* Labor Department reports on producer price index for March.
* Commerce Department reports on March housing starts.
* Quarterly earnings released by Coca-Cola, General Motors, Intel, Johnson & Johnson, Kraft Foods Inc., Lucent Technologies Inc., Pfizer, Taser International Inc., Wells Fargo & Co. and Yahoo.
* Labor Department reports on consumer price index for March.
* Federal Reserve releases survey of regional economic conditions.
* Quarterly earnings released by Altria Group Inc., Caterpillar Inc., Continental Airlines Inc., EBay, Ford, General Dynamics Corp., J.P. Morgan Chase & Co., Motorola Inc., SBC Communications Inc. and Sprint Corp.
* Labor Department reports on weekly jobless claims.
* Mortgage company Freddie Mac reports on mortgage rates.
* Federal Reserve Chairman Alan Greenspan testifies before the Senate Budget Committee on the budget process.
* Conference Board reports its monthly leading economic indicators index.
* Quarterly earnings released by AT&T Corp., BellSouth Corp., Delta Air Lines Inc., Google Inc., Hershey Foods Corp., McDonald's Corp., Merck & Co., Northwest Airlines Corp., Schering-Plough Corp., Union Pacific Corp., United Parcel Service Inc. and Xerox Corp.
* Quarterly earnings released by Eastman Kodak Co., Halliburton Co., International Paper Co. and Maytag Corp.