Wall Street Awaiting Signs on Interest Rates

U.S. stock investors may be looking for direction this week as they digest the idea of an imminent interest rate increase by the Federal Reserve and wonder when rates will go up and, more important, by how much.

“Basically, we’re seeing a shift from a discussion of timing to a discussion of magnitude,� said Brian Bush, director of research at Stephens Inc. “Until the market gets some sense of how fast the Fed will increase interest rates, it’s going to be hard for the stock market to stage a sort of consistent advance.�

In fact, the market fixation on interest rates has overshadowed a stellar corporate earnings season. The reporting season is winding down, but key scorecards are expected this week from Cisco Systems Inc., the world’s largest maker of equipment that directs Internet traffic; computer maker Dell Inc.; entertainment conglomerate Walt Disney Co., and Wal-Mart Stores Inc., the world’s largest retailer.

“May is a tough month for the stock market generally because by the time we get to mid-May, analysts have processed the earnings news,� said Frederic Dickson, senior vice president of D.A. Davidson & Co. “The Dow 10,000 level is going to be a number investors will stick on. We may test that low point� during the week.

In Washington, the government will release widely watched reports for April on the producer and consumer price indexes. Economists polled by Reuters are expecting both to gain 0.3%.

Investors also are watching the geopolitical situation as events in Iraq and other parts of the world have raised uncertainties that have affected markets.

From Reuters

Here are major business and economic events scheduled for the coming week.

Today

* Treasury bill auction in Washington.

* Charter Communications Inc. reports first-quarter results.

Tuesday

* Cisco Systems Inc. and May Department Stores Co. report first-quarter results.

Wednesday

* The Commerce Department reports on international trade for March and the Treasury Department issues a report on the federal budget for April.

* Computer Associates International Inc. reports fourth-quarter results, Federated Department Stores Inc. reports first-quarter results and Walt Disney Co. reports second-quarter results.

Thursday

* The Commerce Department reports on retail sales for April and the Labor Department issues the producer price index report for April, along with weekly claims for jobless benefits. And Freddie Mac, the mortgage company, reports on mortgage rates.

* Among those reporting first-quarter results are Dell Inc., Target Corp., Tiffany & Co. and Wal-Mart Stores Inc.

Friday

* The Labor Department reports on the consumer price index for April, the Commerce Department on business inventories for March and the Federal Reserve on industrial production for April.