Investors better have rested up over the long weekend. This week may be short, but it's heavy on data that spans employment, housing, manufacturing, consumer sentiment and inflation.
The upcoming flood of reports will help decide whether inflation and the economy are rising at paces that investors are comfortable with, and if not, whether the ongoing surge in corporate takeover deals will be enough to keep lifting stocks to new records.
If either inflation or growth is clocking in too fast, the Federal Reserve may refrain from lowering interest rates this year, or even hike them further, which would dampen spending and potentially hurt the stock market. On the other hand, data showing an abrupt halt in growth could also give investors pause.
Mixed housing data caused Wall Street to retreat last Thursday, contributing to the Dow Jones industrial average's drop of 0.36 last week; the Standard & Poor's 500 index's 0.46 percent loss; and the Nasdaq composite index's 0.05 percent decline.
Wall Street will be taking a particularly careful look at the Commerce Department's personal income and spending report for April, which includes the core Personal Consumption Expenditures inflator, the Fed's preferred inflation gauge. The market projects the year-over-year PCE figure, released Friday, will hold steady at 2.1 percent, according to the median estimate of economists surveyed last Friday by Thomson Financial.
Personal income is expected to have risen 0.3 percent, less than March's 0.7 percent advance, and consumption is expected to have increased 0.5 percent, stronger than March's 0.3 percent gain.
A packed data schedule ...
On Tuesday, after the market's Memorial Day holiday Monday, the Conference Board releases its May index of consumer confidence. The index is expected to come in at 105.0, up from last month's reading of 104.0.
Also Tuesday, the Dallas and Chicago Feds release their indexes of regional manufacturing, and Standard & Poor's releases its home price index.
On Wednesday, the Fed's Open Market Committee releases minutes from its May 9 meeting, when the central bank repeated its assessment that growth has been slowing and inflation remains "somewhat elevated." Investors will be interested in reading the reasoning behind the statement, and whether it offers any clues about future rate decisions.
The next day, the Commerce Department will estimate first-quarter gross domestic product. Economists anticipate growth of 0.7 percent, down from the 1.3 percent projected in April. The Commerce Department will also report on construction spending, which is expected to have slipped 0.2 percent in April after rising 0.2 percent in March.
Meanwhile Thursday, the Labor Department reports on the jobs picture. Economists anticipate that nonfarm payrolls rose by 140,000 in May, a bigger increase than in April, and that the unemployment rate held steady at 4.5 percent.
Also on Thursday, the Chicago Purchasing Managers releases its manufacturing index. Economists predict the Chicago PMI to have risen to 55.0 in May from 52.9 in April.
On Friday, in addition to the personal spending and income data, the University of Michigan's May consumer sentiment index is released. The market expects it to come in at 88.7, the same as in April.
Another key report Friday will be the Institute for Supply Management's May manufacturing index, which is expected to come in at 54.3, indicating a similar rate of expansion as April's reading of 54.7.
Also Friday, major automakers release their sales figures for May; the National Association of Realtors reports on pending home sales for April; and the Kansas City Fed releases its regional manufacturing index.
... And a trickle of earnings reports
Retailers Costco Wholesale Corp. and Sears Holdings Corp. and computer maker Dell Inc. release financial results Thursday.
The market projects Costco's fiscal third-quarter profit will come in at 56 cents a share. Costco closed at $56.40 last Friday, at the upper end of its 52-week range of $46 to $58.70.
Sears is expected to post first-quarter profit of $1.22 a share. Sears closed at $179.42 last Friday, in the middle of its 52-week range of $134.56 to $195.18.
Analysts predict Dell will report first-quarter profit of 26 cents a share. Dell closed at $25.99 last Friday, at the upper end of its 52-week range of $18.95 to $27.89.