NEW YORK - This week on Wall Street, investors will find out if consumers' worries about housing, jobs and rising prices are affecting their spending - and, in turn, posing a further threat to the economy.
The market begins today with the Dow Jones industrial average back below 11,900 and having closed at its lowest level since October 2006. Stocks were battered last week by another round of bad news about the economy and the staggering credit market.
This week will have to bring milder readings on the economy, as well as positive signals from the credit markets and corporate America, for investors to regain any confidence. Stocks are at bargain-basement prices - the question is whether investors will find reason to overcome their fears and start taking advantage of them.
The Commerce Department on Thursday releases its February retail sales report. After some mixed monthly sales figures last week from individual retailers, economists surveyed by Thomson Financial/IFR are expecting, on average, retail sales to have edged up by 0.2 percent after a 0.3 percent rise in January.
The government's most recent reports have shown that spending is still technically on the rise, but not because consumers are buying more goods. If not for the rising cost of necessities such as food, gasoline and health care, consumer spending would have been flat in January and December. These climbing costs are a big reason Wall Street is skeptical that interest rate cuts by the Federal Reserve - which meets again next week - are going to be enough to save the economy from recession. If inflation cannot be controlled, Americans also facing sunken home prices will probably continue to have a hard time paying their bills.
On Friday, the Labor Department releases its gauge of consumer prices for February. Economists are predicting a rise of 0.3 percent in the consumer price index, or a rise of 0.2 percent in the core index, which excludes food and energy costs. In January, consumer prices rose 0.4 percent, or 0.3 percent after stripping out food and energy.
The stock market has tumbled back to its weakest levels in more than a year, suffering not only because of the flagging economy but also because of the seized-up credit markets. It's been a vicious cycle - bad economic data has made lenders worried about getting their money back from borrowers, and that pullback in lending is now dragging down businesses' and individuals' ability to spend.
Last week, Wall Street balked at the February jobs loss, banks' requests to hedge funds and other borrowers for loan paybacks, and a plan for troubled bond insurer Ambac Financial Group that many considered insufficient.The Dow fell 3.04 percent, the Standard & Poor's 500 index lost 2.80 percent, and the Nasdaq composite index dropped 2.60 percent.
On Monday, the Commerce Department reports on wholesale inventories for January, which are expected to have inched up by 0.5 percent.
On Tuesday, the Commerce Department reports on the January international trade deficit, which is expected to have widened slightly to $59.5 billion after shrinking to $58.8 billion in December.
On Thursday, the department reports on January's business inventories, and then Friday, the University of Michigan issues its preliminary reading on consumer sentiment in March.
This week is a light week for corporate earnings, but private equity firm Blackstone Group LP and homebuilder Hovnanian Enterprises Inc. releases quarterly results on Monday and grocery-store operator Kroger Co. reports Tuesday.