XOI is Amex Oil index

XOI is Amex Oil index

NEW YORK (CNN/Money) - A lot can turn on a few words. Or just one.

Take the word "measured," for example.

If it appears in the statement that the Federal Reserve board releases Tuesday, following its monetary policy-setting meeting, it may provide comfort to stock investors worried about the pace of rising rates. Stocks may even rebound after two down weeks, although other words and phrases bound to creep up next week, such as "oil prices at all-time highs" may limit any gains.

But what if that word doesn't appear? Stocks -- already at or near lows for the year -- may fall even more.

On Tuesday, the central bank is expected to decide to boost the Fed funds rate, an overnight bank lending rate, by 25 basis points, or a quarter percentage point. The Fed has raised the Fed funds rate six times since June, by a quarter percentage point each time.

"The talk is that the Fed is going to be getting more aggressive soon, and may start raising rates by 50 basis points at a time," said Timothy Ghriskey, chief investment officer at Solaris Asset Management. "It's not going to happen this time, because (Fed Chairman) Alan Greenspan knows he needs to prepare the market for this in advance."

"But the language in the Fed comments and in Greenspan's speeches of late has been pointing to rate hikes becoming more aggressive," Ghriskey added. "The word 'measured' is going to be dropped soon, maybe at this meeting, maybe at the next."

(For a detailed preview of next week's Fed meeting, click here.)

The word measured is key to many investors because of increased worries of late about inflation. Stocks have stalled this year, with the Nasdaq ending Friday at a 2005 low -- amid rising oil prices and worries about inflation. Higher inflation and higher interest rates over the long-term leads to slower economic growth, a slowdown in corporate profits and ultimately, lower stock prices.

"The world assumes the Fed will raise the rates by a quarter percentage point, that's a non-event," said Jack Ablin, chief investment officer at Harris Trust. "It's what the statement lays out about the pace of future rate hikes that will be important, because that's what people are thinking about. I think the inflation reports will also be pivotal next week."

In addition to the Fed meeting, next week brings plenty of reports that address the inflation question in other ways, including February reads on producer prices and consumer prices, new and existing home sales and durable goods orders.

In particular, investors will be eyeing the Producer Price index (PPI), due Tuesday, and the Consumer Price index (CPI), due Wednesday.

"PPI has been rising, but retailers and manufacturers haven't raised prices yet, because there is too much cheap foreign competition," said Jim Melcher, founder and president at hedge fund Balestra Capital. "If you see CPI move up, that could upset stocks."

(For a look at next week's key events, click here.)

The price of oil is also bound to continue influencing stocks in the short term. On Friday, U.S. light crude for April delivery closed at $56.72, an all-time closing high. Earlier in the week, it rose as high as $57.60 during the session.

"There has been this continual debate as to whether higher oil prices are inflationary or a restraint on growth," Ablin added. "This year, the bond market has signaled that it is inflationary."

And the increasingly higher bond yields, as well as the higher oil prices, Ablin added, are bound to continue to pressure stocks, "measured" or not.

• Oracle (Research) reports its quarterly earnings after the close Tuesday. The software maker is expected to have earned 15 cents per share, according to First Call estimates, after earning 12 cents a year ago.
• The February Producer Price Index is due Tuesday. Economists surveyed by Briefing.com expect it to have risen 0.3 percent after climbing 0.3 percent in January. The so-called "core" PPI, which excludes often volatile food and energy prices, is expected to show a gain of 0.1 percent in February, after rising 0.8 percent in January.
• On Wednesday, the Consumer Price Index is due. It's expected to have gained 0.3 percent after be up 0.1 percent in January. The "core" CPI is forecast to have increased 0.2 percent in February, analysts estimate. The core rose 0.2 percent in January.
• Wednesday also brings the February read on existing home sales. Sales are expected to have fallen to a 6.65 million unit rate from a 6.8 million unit rate in January.
• On Thursday, the February durable goods orders report is due. Orders are expected to have dropped 0.8 percent after being down 1.3 percent in January.
• Thursday also brings the read on new home sales for February. Sales are seen blossoming to a 1.14 million unit annual rate in February from a 1.106 million unit rate in January.
• All financial markets are closed Friday for Good Friday, while the bond market closes early Thursday.