Investors could be in for a bumpy ride next week

By Ben Rooney, staff reporter


NEW YORK (CNNMoney.com) -- Markets could be in for another bumpy ride next week as investors continue to look for clues on where the global economy is headed.

There will be no shortage of data to fuel the debate between bears and bulls. Economic reports are due on manufacturing, real estate and inflation, among others.

"The economic news will be important as investors look for direction on the second half of the year," said Lawrence Creatura, a portfolio manager with Federated Clover Investment Advisors. "There are multiple, overlapping uncertainties right now and any illumination from the macro data could tilt the balance."

Stocks ended last week on a high note, with the Dow Jones industrial average booking its first weekly gain in a month. But analysts expect trading to remain volatile in the weeks ahead as investors await clear direction on the economy in the United States and abroad and the debt situation in Europe.

While fears of a full-scale meltdown in Europe eased slightly last week, questions about the fiscal health of some economies in the region will continue to weigh on stocks, according to Peter Cardillo, chief market economist at Avalon Partners.

"The rhetoric out of the EU will continue to be a dominating factor," he said.

The energy sector will also be in focus, as executives from BP travel to Washington next week to answer questions about the ongoing oil spill in the Gulf of Mexico.

Shares of the British oil company have plunged recently amid growing speculation that it will be forced to cut its dividend payment. Some analysts think BP (BP) could end up in bankruptcy court because of the spill.

In addition to corporate and economic drivers, the ongoing debate in Washington over Wall Street reform will also be in focus. The House and Senate will meet to merge two proposed bills that would mandate sweeping changes, including steps to curb risk taking, protect consumers and prevent financial firms from getting too big to fail.

"Investors as well as leaders of corporations are awaiting stability in the regulatory environment so they can make plans for the future," said Creatura. "We don't know what the rules of the road are, and markets hate uncertainty."

Meanwhile, trading is expected to be volatile due to the simultaneous expiration of stock index futures and options as well as individual stock futures and options next week. The event can cause wild fluctuations in the underlying stocks and greater volatility in the broader market.

"Next week I think volatility will remain quite high due to quadruple expiration," said Cardillo. "With the market already in a downward trend, we could retest the lows we saw earlier this week."

On the docket

Monday: No significant economic reports are scheduled to be released.

Tuesday: Government data on import and export prices is due before the market opens, though the report is usually not a market mover. Consumer electronics giant Best Buy (BBY, Fortune 500) releases quarterly results and a report on manufacturing activity in New York comes out before the opening bell.

After the market opens, the Treasury Department will release a report on foreign purchases of U.S. debt.

Wednesday: The government will release a report on housing starts and building permits before the market opens.

Economists surveyed by Briefing.com expect housing starts fell to an annual rate of 655,000 units in May from 672,000 the month before. Building permits, considered a leading indicator, are forecast to rise to an annual rate of 655,000 from 610,000.

The producer price index, a measure of wholesale inflation, is expected to show prices fell 0.4% in May. Excluding volatile energy prices, producer prices likely rose 0.1%, according to estimates.

A report on capacity utilization and industrial production comes out after the opening bell.

The government's weekly oil inventory report also is due Wednesday morning

In corporate news, parcel delivery service FedEx (FDX, Fortune 500) is scheduled to report quarterly results in the morning.

In the evening, Federal Reserve chairman Ben Bernanke will deliver a speech in New York on proposed financial reform.

Thursday: The weekly jobless claims report from the Department of Labor is due in the morning. Roughly 450,000 Americans are expected to have filed new claims for unemployment last week, down from 452,000 in the previous week.

The consumer price index, the government's main inflation gauge, is expected to show that prices fell 0.2% in May after falling 0.1% the month before. Excluding energy and food prices, the so-called core CPI, prices are forecast to have risen 0.1% last month.

After the market opens, reports on leading economic indicators and manufacturing in Philadelphia are scheduled to come out.

In the afternoon, BP chief executive Tony Hayward is scheduled to testify before a House committee on the Deepwater Horizon, a drilling rig operated by the British oil company, which sank in April after an explosion and caused the worst oil spill in U.S. history.

Friday: The Labor Department will release a report on state unemployment levels at 10 a.m. ET. To top of page

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