NEW YORK (CNNMoney.com) - Key inflation readings due this week may provide investors precious new clues about the interest rate outlook.

Tuesday will bring information from the Labor Department on how much businesses are experiencing price increases in the Producer Price Index.

But that's really just a prelude to Wednesday's Consumer Price Index, which measures the price change in certain consumer goods and services.

Both reports are expected to offer some indication of the future course of interest rates and could set the tone for the market for the next few weeks.

Investors will be especially focusing on the core CPI report, which excludes volatile food and energy prices. It has exceeded expectations the past two months.

"That will be looked at closely. That could be market moving," said Steve Goldman, market strategist at Weeden & Co.

Uncertainty surrounding the interest rate outlook has been vexing stocks, causing a heavy selloff in the U.S. and in markets around the world over the last several weeks.

The Dow sank to a four-month low last week and finished down 3.2 percent for the week. The S&P 500 fell 2.8 percent and the tech-fueled Nasdaq shed 3.8 percent last week.

"The market has been in a sour mood," said Alfred Goldman, chief market strategist at A.G. Edwards. "The general concern is that the Fed is not going to pull off a soft landing," he said.

Inflation has been on investors' minds as they search for clues about whether the Federal Reserve will hike rates for the 17th straight time when it meets June 28-29 and, more importantly, what it intends to do in the months ahead.

Unlike the last two years, when the Fed made it plain it would continue to raise rates at a measured pace, central bank policy-makers have now said they simply don't know what will come next and are watching the economic numbers, just like everyone else.

If this week's inflation readings exceed expectations, traders predict a bloodbath.

"Everybody's so afraid of it," said Todd Clark, director of stock trading at Nollenberger Capital Partners in San Francisco. "If the numbers show a big increase in inflation, the market's not going to like that at all."

On the plus side, Clark also said he expects a big boost if the inflation numbers come in lighter than expected.

Stock investors don't like higher interest rates because they ultimately slow the flow of money through the economy and put the brakes on corporate profit growth, thus making stocks less appealing.

Fed Chairman Ben Bernanke set off the latest round of inflation jitters when he made hawkish comments early last week, dashing hopes the Fed would pause in its campaign of interest rate hikes and raising new fears the central bank would raise rates too high and strangle economic growth.

Also on tap this week: earnings reports from several big investment banks, which have been reporting bumper earnings in recent quarters on strength in trading and underwriting.

First up is Lehman Brothers (Research), set for before the opening bell Monday, followed by Goldman Sachs (Research) on Tuesday and Bear Stearns (Research) Thursday. All three are expected shine, boosted by a surge in trading volume.

Also set to report next week are Best Buy (Research) and Adobe (Research), Carnival (Research) and World Wrestling (Research).

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How low will stocks go?

The Bernanke panic.