Wall Street may find itself on the defensive next week if reports on housing and growth suggest that the United States economy is headed for an acute slowdown despite the Federal Reserve's pause in its two-year cycle of interest-rate increases.

While the recent pullback in crude oil prices and the Fed's decision to keep rates steady at its last two policy meetings have underpinned the stock market's gains so far in September, signs that the economic slowdown could prove severe have stirred anxiety on Wall Street and Main Street.

Strategists said the surprisingly steep drop in the Philadelphia Federal Reserve Bank's business activity index this month brought growth concerns into sharper focus.

They say the biggest fear is that fallout from a slowing housing market could stymie economic growth and hurt the outlook for corporate profits.

"We know housing is a problem," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vt.

"So what happens is you need other parts of the economy to offset it and if those other parts of the economy, particularly manufacturing and service industries, are not going to hold up, then you have a much larger potential problem developing."

As a result, the three major U.S. stock indexes are likely to struggle to extend their recent climb. On Wednesday, the combination of strong earnings and the Fed's decision to keep interest rates unchanged for the second month in a row sent the Standard & Poor's 500 Index up briefly to a 5-year intraday high at 1,328.53.

With more than a handful of Fed officials scheduled to speak next week, investors could become more cautious, the strategists said.

Home on the Range

The coming week's economic data could help investors assess the likely magnitude of the economic slowdown, with August figures on existing and new home sales and the final reading on second-quarter gross domestic product on tap.

"Existing home sales and new home sales will be big ones," said Paul Nolte, director of investments at Hinsdale Associates, in Hinsdale, Ill. "How much off of expectations those two numbers are will go a long way in determining the market."

Economists polled by Reuters expect that existing home sales slowed in August to an annualized rate of 6.18 million units from 6.33 million in July. That report is due Monday at 10 a.m.

New home sales in August are forecast at a pace of 1.04 million units, below July's rate of 1.072 million, the Reuters poll showed. The new homes report is set for Wednesday at 10 a.m.

The Reuters poll calls for the final estimate of second-quarter GDP to show the U.S. economy grew at an annual rate of 2.9 percent, matching the previous reading.

A key measure of inflation, the August core personal consumption expenditures, or PCE, price index, will be released Friday. Often called the Fed's favorite inflation gauge, the core PCE excludes volatile food and energy prices. Economists polled by Reuters see a 0.2 percent increase in the August core PCE index, compared with July's 0.1 percent gain.

Personal income in August is forecast to rise 0.3 percent, while personal consumption is seen up 0.2 percent.

Although a statement from the Fed's policy-setting meeting this past week said "inflation pressures seem likely to moderate over time," the Fed has left the door open to future interest-rate increases if inflation were to prove menacing.

Rounding out next week's menu of economic indicators will be the September consumer confidence index on Tuesday from the Conference Board, August durable goods orders on Wednesday and the University of Michigan's final reading on September consumer sentiment on Friday.

The Chicago Purchasing Managers' Index, a gauge of Midwestern manufacturing activity known as the Chicago PMI, also will be released Friday. Its prices-paid component will be watched for any pickup in the pace of inflation.

Stocks up for September

Stocks had risen sharply since the start of the month, with the S&P 500 and the Dow Jones industrial average attempting to mount their biggest September advance in eight years as crude prices slid.

On Friday, growth concerns rattled stocks, pushing the blue-chip Dow average down 0.46 percent for the week, while the broad S&P 500 declined 0.39 percent and the Nasdaq Composite Index lost 0.75 percent.

But for September so far, stocks are still in the winner's circle: The Dow is up 1.12 percent, the S&P 500 is up 0.84 percent and the Nasdaq is up 1.61 percent.

The strong showing in a traditionally turbulent month for stocks, however, has prompted some investors to lock in profits. This has increased volatility as the market awaits more data to determine if near-term growth trends will help sustain corporate earnings.

On Friday, U.S. crude oil for November delivery fell $1.04 to settle at $60.55 a barrel on the New York Mercantile Exchange. That's down about 14 percent from Aug. 31, when the then-leading NYMEX October crude contract closed at $70.26. The price of oil has fallen about 23 percent from the NYMEX crude record of $78.40 a barrel set on July 14.

A Numbers Game

"The numbers so far have been quite clear, whether you are talking about a hard landing or a soft landing, that basically the economy is moderating," said Subodh Kumar, chief investment strategist at CIBC World Markets, in Toronto.

"People should think in terms of the leadership that took place in stocks during the third quarter continuing. The real leadership is in sectors that have lagged, like health care, staples and telecoms, with less focus on cyclical companies."

The third-quarter earnings reporting season doesn't kick off until Alcoa Inc. (AA) reports on Oct. 10. But a handful of companies will deliver their quarterly results next week, including drugstore chain Walgreen Co. (WAG).

Other companies set to report earnings include Jabil Circuit Inc. (JBL), maker of electronic components for cell phones and computers; home builder Lennar Corp. (LEN); Paychex Inc. (PAYX), one of the largest U.S. payroll processors, and spice producer McCormick & Co Inc. (MKC).

And Now, a Word From the Fed

The Fed's roster of speakers next week includes Richard Fisher, president of the Federal Reserve Bank of Dallas. On Monday, he is scheduled to address a forum in Mexico about the current state of the U.S. and Mexican economies.

On Tuesday, Federal Reserve Board Governor Susan Schmidt Bies will testify Tuesday at a Senate Banking Committee hearing in Washington.

Federal Reserve Bank of Kansas City President Thomas Hoenig will speak Wednesday about monetary policy and the economic outlook at a forum in Nebraska.

On Friday, Federal Reserve Bank of St. Louis President William Poole will speak on "Data Dependence" at a conference in Tennessee.