updated 8/13/2006 5:45:55 PM ET 2006-08-13T21:45:55

Investors got their long-awaited pause in interest rate hikes from the Federal Reserve last week. But perhaps they should've looked up the definition of the word "pause" before wishing so hard.

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In reality, they were looking for a stop.

The Fed, while indeed holding off on a rate hike for the first time in 18 meetings, didn't give Wall Street the sense of finality it was looking for. There are still inflationary pressures in the market, according to the Fed. If they increase, then the pause could last just five more weeks, until September's Fed meeting.

While it's now more likely that the Fed will hold off, never underestimate Fed Chairman Ben Bernanke's fervor in trying to quash inflation. He's new to the job, and wants to gain the kind of confidence his predecessor, Alan Greenspan, inspired in the marketplace.

So instead of celebrating the pause, Wall Street ultimately shrugged and, facing the same uncertainties that have plagued the markets since mid-May, bid stocks modestly lower. For the week, the Dow Jones industrials lost 1.36 percent, Standard & Poor's 500 lost 0.99 percent and the Nasdaq composite index dropped 1.31 percent.

And now, investors are back on inflation watch, parsing each day's economic data in an attempt, vain as it likely will be, to predict the Fed's next move. Unfortunately, that's likely to mean more up-and-down trading and a market trapped in the same trading range it's been in all summer.

Economic data
The parsing begins Tuesday with the Labor Department's producer price index, which measures inflation at the wholesale level. PPI is expected to rise 0.2 percent for July, on par with June's increase. With food and fuel prices removed, what's known as core PPI is expected to climb 0.3 percent, less that June's 0.5 percent jump.

On Wednesday, the Labor Department issues the consumer price index for July, expected to rise 0.4 percent, up from a 0.2 percent increase in June. Core CPI is expected to climb 0.3 percent, the same increase as in June.

If any of the CPI or PPI figures come in above expectations, that could mean more inflation pressure in the market, and stocks will likely fall in anticipation of another Fed rate hike.

On Friday, the University of Michigan releases its consumer sentiment index for August. The index is expected to fall to 83.9 from an 84.7 reading in July. A larger drop could mean a slowing economy, which — if inflation appears to be gaining steam — could actually help stocks.

Earnings
Second-quarter earnings season is winding down, though the markets largely ignored a solid quarter in favor of Fed-watching. However, three Dow components, Home Depot Inc., Wal-Mart Stores Inc. and Hewlett-Packard Co., will report this week.

Wal-Mart is expected to earn 72 cents per share, up from 67 cents per share in the second quarter last year, when it reports earnings Tuesday morning. Wal-Mart's stock has been stuck in the $40 range for 2006, and is down 12.1 percent from its 52-week high of $50.87 on Nov. 25, closing Friday at $44.69.

Home Depot's stock has also lost ground for much of the year, and is off 24 percent from its 52-week high of $43.95 on March 23. The home improvement retailer is expected to earn 93 cents per share, up from 82 cents per share a year ago, in its report due Tuesday morning. Home Depot closed Friday at $33.27.

After Wednesday's session, computer maker Hewlett-Packard will release its fiscal third-quarter earnings, which are expected to come in at 48 cents per share, compared to 36 cents per share a year ago. Unlike other stocks, Hewlett-Packard has weathered the recent downturn in the tech sector quite well, and is up nearly 40 percent from its 52-week low of $23.66 on Aug. 16, 2005, closing Friday at $33.05.

Rival Dell Inc. has fared far worse of late, down 43.5 percent from its Aug. 17, 2005, high of $37.13 and closing Friday at $21.07. The company is expected to earn 23 cents per share, down from 38 cents per share a year ago, when it issues its second-quarter results Thursday afternoon.

Events
A pair of Federal Reserve officials are slated to speak this week, with Dallas Fed President Richard Fisher addressing a Dallas real estate conference Wednesday and a community luncheon at Shreveport, La., Thursday, while Fed Governor Randall Krozner is slated to talk to a San Francisco banking conference Thursday.

Past comments from Fed officials have changed the direction of the stock market, and Fisher and Krozner could do so again if they touch on any number of economic topics in their speeches.

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