NEW YORK – U.S. stock investors hope the start of the earnings season and a slew of important economic data next week can help restore some confidence to an equity market rattled by fears of higher interest rates and steep oil prices.
The blue-chip Dow Jones industrial average (search) fell 1.51 percent for the week, the broader Standard & Poor's 500 index (search) lost 1.80 percent, and the tech-heavy Nasdaq (search) slid 1.40 percent as a widening trade deficit fed fears of faster interest-rate hikes.
Next week gives investors an opportunity to focus on a solid flow of corporate results.
Two more big names on Wall Street — Goldman Sachs (GS) and Morgan Stanley (MWD) — will report results on Thursday, which also happens to be St. Patrick's Day. Earnings from FedEx Corp (FDX) and Nike Inc. (NKE) also are due Thursday.
"The combination of the economic statistics and the start of serious earnings discussions may actually help the markets, in this particular case," said Joseph Battipaglia, chief investment officer at Ryan, Beck & Co.
This week, he observed, "was mostly spent dreading the notion of ever higher energy prices, ever deeper current account deficits and what it might mean for the dollar and bond investments."
Investors will scrutinize Tuesday's key retail sales data for February and watch for any impact on the dollar from the report on the fourth-quarter current account deficit (search) on Wednesday.
February's industrial production data, also on Wednesday, will be crucial. And on Friday, special attention will be paid to data on import and export prices for February as well as the influential University of Michigan consumer sentiment report.
Stock investors will keep a weather eye on crude oil prices and signs of inflation in the week ahead, which includes an OPEC meeting and ends with "triple witching" day, when contracts for stock index futures, stock index options and stock options all expire.
Oil prices bounced back above $54 a barrel Friday after the International Energy Agency said robust growth in the United States and China will pump up consumption even faster than expected this year.
The dollar weakened again Friday in volatile trading after a report showed the U.S. trade deficit widening in January to $58.3 billion, its second-biggest on record.
U.S. Treasury bond prices fell Friday as the growing trade deficit hit the dollar and threatened to scare foreign investors, while increasing inflationary pressure at home. The yield on the 10-year Treasury note hit 4.55 percent, near a seven-month high, while its price slid 19/32 to 95-22/32.
"The reason the market seems to be struggling in my opinion is that investors are becoming slightly more worried about inflation and rising interest rates than they were earlier this year," said Michael Sheldon, chief market strategist at New York brokerage Spencer Clarke.
"In general, rising interest rates are not necessarily a bad thing for the market if they reflect a strengthening economy," Sheldon added. "But if they reflect higher inflation, then that could present a problem for the stock market."
Sheldon added that "the economy is doing pretty well. The question is this battle with higher interest rates, inflation and the dollar. Ultimately, I think investors may have to become more cautious. It's a tough call here."
Wednesday, oil ministers from the Organization of Petroleum Exporting Countries (search) will meet in Iran to set production policy.
Oil prices have climbed about 25 percent since the start of the year on concern about rising demand and tight supply.
Making the week potentially more volatile is the fact that Friday is "triple witching" day, when contracts for stock index futures, stock index options, and stock options all expire on the same day.
The Dow Jones industrial average has been down six of the last nine first-quarter triple-witching days, according to the Stock Trader's Almanac.
"It looks to me like a good market to lose money in," said Jeffrey Saut, chief investment strategist at Raymond James Financial.