Wall Street: All eyes on the consumer
After two strong weeks of gains, investors will zero in on further signs that the economy is indeed on the road to recovery. Retail sales will set the tone.
NEW YORK (CNNMoney.com) -- Investors will brace for a spate of economic reports this week with their fingers crossed that there is more good news than bad since that will set the tone for the remaining seven weeks of the year.
With Black Friday less than two weeks away, retailers are hoping consumers will be willing to open their wallets during the all-important holiday sales period, helping fuel the economic recovery.
Kicking off the week will be the government's monthly retail sales report, which investors hope will shed light on how much consumers will be willing to spend.
"Next week is all about consumer spending and the holiday," said Burt White, chief investment officer at LPL Financial.
Retail sales have shown some improvement recently, suggesting that consumers are suffering from "frugal fatigue" and may be more willing to splurge this holiday season, White said.
A rebound in consumer spending, which accounts for the bulk of U.S. economic activity, could help fuel bets that a recovery is firmly underway.
The outlook for consumer spending remains murky with the national unemployment rate at a 26-year high of 10.2%.
"In this environment, anything associated with jobs is probably the most important thing," said Quincy Krosby, market strategist at Prudential Financial.
To that end, investors will likely pay close attention to Thursday's report on the number of Americans filing first-time claims for state unemployment benefits.
Investors will also focus on the plight of the U.S. dollar, which wallowed near a 15-month low against the euro for most of last week.
The dollar has been taking a beating recently as investors take advantage of rock-bottom interest rates in the United States to bulk up on more risky assets.
"For now, it's still sell the dollar and buy risk," White said. "It's a crowded trade, but a good one."
Stocks ended the week on a high note, logging the second consecutive week of gains as optimism about the recovery gained momentum. The question on investors' minds this week will be 'can that momentum be sustained?'
Demand for riskier assets, like equities, could hit a speed bump Monday afternoon with Federal Reserve chairman Ben Bernanke scheduled to deliver an economic outlook speech at the Economic Club of New York.
While the central bank is not responsible for managing currency fluctuations, some analysts think Bernanke may strike a more hawkish tone given the severity of the greenback's recent weakness.
Others expect Bernanke to echo recent official policy statements that interest rates will remain "exceptionally low" for an "extended period" of time.
Monday: The week starts with a closely watched report on October retail sales before the opening bell.
Economists expect the Commerce Department to report that sales rose 0.9% last month after 1.5% drop, according to consensus estimates gathered by Briefing.com.
Also due Monday morning, a report on manufacturing activity in the mid-Atlantic region and business inventory data from September.
Federal Reserve chairman Ben Bernanke will speak about the outlook for the U.S. economy in New York at midday.
Tuesday: The government's producer price index comes out before the market opens. Analysts think prices at the wholesale level ticked up 0.5% in October. Excluding volatile energy prices, the index is forecast to rise 0.1%.
Government figures on capacity utilization and industrial production in October are due out at 9:15 a.m. ET.
The market will also digest quarterly financial results from Home Depot (HD, Fortune 500), Target (TGT, Fortune 500) and TJX Companies (TJX, Fortune 500) before the opening bell.
Wednesday: The housing market will be in focus with reports on housing starts and building permits released before the market opens.
Also before the opening bell, the government's closely-watched inflation gauge is expected to show that consumer prices were flat in October. Excluding food and energy, prices are expected to have risen 0.1% last month after a 0.2% increase the month before.
Thursday: The Labor Department reports on the number of Americans filing new claims for unemployment benefits at 8:30 a.m. ET.
Jobless claims fell to 502,000 filings last week and analysts say a figure below 500,000 this week could help push the market higher.
A report on leading economic indicators comes out after the market opens.
Sears Holdings (SHLD, Fortune 500) will report quarterly earnings in the morning, while PC giant HP (HPQ, Fortune 500) and apparel-maker Gap (GAP, Fortune 500) will post earnings after the closing bell.
Friday: No economic reports are on the docket. 
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