Investors will be watching oil prices and durable goods orders this week to gauge the strength of corporate and consumer spending.
Stocks, which have been resilient this summer as crude climbed above $60 a barrel, wavered last week after Wal-Mart Stores Inc., the world's biggest retailer, warned that rising oil prices were taking a toll on consumer spending.
"There is a growing impression that the consumer is weakening. We saw that in a lot of the retail data, Wal-Mart being most visible," said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, N.Y. "It shows the high price of gas at the fuel pump" and "the rise in short-term interest rates, which impacts a lot of the mortgages out there, are influencing consumers."
On Friday, U.S. crude oil futures shot up more than $2 a barrel after Ecuador halted its exports of the commodity. A rocket attack against two U.S. warships in Jordan also added to concerns about supply disruptions and drove oil futures higher. On the New York Mercantile Exchange, September crude settled at $65.35 a barrel, up $2.08.
But stocks resisted a decline on oil concerns and closed little changed, with the major drag coming late in the session from a Texas jury's verdict against pharmaceutical giant Merck & Co., a Dow component.
"The economy is still doing fine," said Warren Simpson, managing director at Stephens Capital Management in Little Rock, Ark. "Certainly, oil is very high and it is a matter for concern, but there's no indication it will hit the economy in the next four or five months."
With few major economic indicators on tap, data on orders for durable goods, which are products made to last three or more years, will garner attention this week. The report is likely to give the market a clue about how much capital investment companies are making.
The Week Ahead
* National Assn. of Realtors reports July's sales of existing homes.
* Quarterly earnings report expected from Williams-Sonoma.
* Commerce Department reports durable goods orders and new-home sales for July.
* Quarterly earnings report expected from TiVo.
* Quarterly earnings reports expected from Petco and Restoration Hardware.
* University of Michigan releases its final consumer sentiment index for August.
* Federal Reserve Chairman Alan Greenspan appears at an economic symposium in Jackson Hole, Wyo.