Investors on Guard as Data Are Released

Stocks probably will stick to a range this week as investors await the Federal Reserve’s monetary policy decision and sort through a fresh batch of economic data for signs the recovery is still intact.

The Federal Open Market Committee is widely expected to keep interest rates steady and maintain its expectations for tame inflation and gradual jobs growth at its policy-setting meeting Tuesday.

While most investors are betting rates will stay low for at least the rest of the year, particularly given unexpectedly soft labor market statistics in recent weeks, they will be listening for any shift in the Fed’s outlook.

“What’s really important is how the [committee] characterizes the labor market in their statement,” said Jeff Kleintop, chief investment strategist at PNC Advisors, adding that any hint from the Fed that the jobs drought is more severe than currently thought could affect investors’ interest-rate expectations.

Security jitters also may help temper investors’ enthusiasm for stocks. The market retreated sharply after the deadly bombing in Madrid put investors on guard, compounding concerns that the market has already factored in expectations for better corporate profits after the strong stock rally in the last year.

Investors, however, are hungry for evidence that U.S. growth will remain robust, even after the effect of the government’s attempts at economic and fiscal stimulus begins to fade.

“We’ll continue to look for positive economic news, something to offset the jobs numbers,” said Edgar Peters, chief investment officer at PanAgora Asset Management. “People will hook onto whatever we can get.”

The flow of corporate earnings reports remains at a trickle this week, although a few companies will nab the spotlight with their results. Results are on tap from General Mills Inc., the maker of Wheaties cereal, Betty Crocker cake mixes and Progresso soups; package delivery giant FedEx Corp., and the world’s top athletic shoemaker, Nike Inc.

Worries that businesses are not growing enough to hire new workers have been nagging investors for months as the weak labor market heightens fears consumers may rein in the spending that buoyed U.S. growth through the recent economic downturn.

“More and more, you’re going to be listening to company conference calls to find out whether they are hiring people or will be hiring people,” said Henry Herrmann, chief investment officer at Waddell & Reed. “What’s really in play now is whether or not the economic expansion is sustainable ... and an important part of the answer is jobs.”

Industrial production figures also will garner some attention today. Economists are expecting a rise of 0.4% in February, versus at 0.8% gain in January, according to a Reuters survey.

The government’s consumer price index, due Wednesday, is expected to show a gain of 0.3% overall in February and a smaller increase of 0.1%, excluding volatile food and energy prices, according to economists polled by Reuters.

Investors are looking for any signs of inflation, because an uptick could spur the Fed to hike rates sooner rather than later.