updated 4/10/2005 2:40:43 PM ET 2005-04-10T18:40:43

Although oil prices dropped sharply last week, Wall Street will be eyeing the first wave of corporate earnings reports to see whether climbing energy prices are sapping strength from corporate America.

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While oil prices last week posted their biggest weekly loss since December, oil remains above $53 per barrel, and those prices could translate into higher transportation and energy costs for many companies, especially retailers and industrials.

In addition to eroding the bottom line, Wall Street fears those higher costs could be passed onto consumers. Should that happen, one of two things could result — either consumers spend less, curbing the economy, or those higher prices could trigger inflation.

After a month in which even uttering the word inflation in earshot of investors seemed to push stocks lower, that’s the last thing Wall Street wants to see.

That’s also why the markets rallied last week as crude oil futures fell for five consecutive sessions, dropping from an intraday record of $58.28 on Monday to settle Friday at $53.32. For the week, the Dow Jones industrial average rose 0.55 percent, the Standard & Poor’s 500 index was up 0.71 percent, and the Nasdaq composite index gained 0.73 percent.

Trade, retail, industrial output reports
The government will give investors a reading on the economy this week, including the latest on the nation’s trade deficit, retail sales strength and industrial production.

On Tuesday, the Department of Commerce is expected to report another increase in America’s trade deficit. Economists predict the deficit will have climbed to $59 billion in February, up slightly from $58.3 billion in January.

Retail sales will be in focus Wednesday. For March, the Commerce Department is expected to report a 0.7 percent increase in sales, up from a 0.5 percent hike in February. Without the surprisingly healthy automotive sector, retail sales were expected to rise 0.6 percent for March from a 0.4 percent increase in February.

On Friday, the Federal Reserve will report on the nation’s industrial sector. Industrial production is expected to rise 0.3 percent, the same rate as reported for February.

GE, Citigroup, AMD quarterlies
First-quarter earnings season begins in earnest this week, with a number of notable companies releasing their quarterly results and giving forecasts for current and future quarters.

General Electric Co. is considered a significant barometer for earnings, given the conglomerate’s varied holdings in media, financing and manufacturing. The Dow industrial is expected to earn 37 cents per share when it reports Friday morning, up from 32 cents per share in the first quarter a year ago. The stock has climbed 21 percent from its 52-week low of $29.55 on May 10, 2004, closing Friday at $35.74.

Fellow Dow industrial Citigroup Inc. has seen its stock fall sharply since early February, a victim of the stock market’s distaste for the financial sector as interest rates rise and inflation becomes an issue. Citigroup has fallen 8.8 percent since closing at $49.78 on Feb. 8, finishing Friday at $45.40. The company is expected to post profits of $1.02 per share, up from 98 cents a year ago, when it reports earnings before Friday’s session.

On Wednesday, chip maker Advanced Micro Devices Inc. is expected to report earnings of 3 cents per share, down sharply from a profit of 12 cents per share a year ago. Following the trend of the tech sector as a whole, AMD has fallen off sharply since reaching its 52-week high of $24.95 on Dec. 6, closing 31.5 percent lower at $17.09 on Friday.

FOMC meeting minutes due
On Tuesday afternoon, the Federal Reserve will release the minutes from the Open Market Committee’s March 22 meeting, at which it raised interest rates by a quarter percentage point to 2.75 percent and warned that inflation may become an issue.

The Fed minutes have given investors hints on the thinking of committee members, and in the past have triggered inflation concerns and pushed stocks lower.

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