Steady is the watchword for stock markets this week when investors will take in a host of data expected to show the US economy's gradual growth is continuing.
Investors usually are reluctant to make any big trading moves before a meeting of the Federal Reserve's policy-making body. The Federal Open Market Committee, which will meet tomorrow, is expected to keep short-term US interest rates at 45-year lows for several months to spur economic growth.
Stocks are expected to trade in a narrow range with volume light as earnings reports give way to the late summer lull.
Besides the Fed meeting, investors will get a slew of economic data: the retail sales report on Wednesday, the US Producer Price Index on Thursday, followed by the Consumer Price Index and University of Michigan's consumer sentiment survey on Friday. These numbers will grab Wall Street's attention for clues on personal spending, consumers' view of the economy and inflation.
A of the 22 top bond dealers on Wall Street who deal directly with the Fed found that 18 expect the central bank to keep rates on hold well into next year. Four were expecting another cut this year to shore up growth.
In a report in the Washington Post, Mr John Berry, a widely followed Fed watcher with a good track record of forecasting Fed moves, wrote that officials have sent strong signals that in contrast to previous upturns, strong growth will not trigger rate increases for a long time to come because they remain concerned that inflation could fall further despite the return of rapid growth.
Last week, the Nasdaq fell 4.2 per cent, its biggest weekly percentage drop since mid-January. The blue-chip Dow Jones industrial average rose 0.40 percent. The broad Standard & Poor's 500 slipped 0.3 per cent.
The stock market got some relief from its recent worries about rising interest rates when the government's successful auction of Treasury notes last week halted a slide in bond prices and a jump in yields last Friday to one-year highs.
This week will be quiet on the corporate earnings front as most companies have already released quarterly results.
But there will be a few noteworthy corporate report cards from industry bellwethers, including computer maker Dell and Wal-Mart, the discount retailer that is also the world's biggest company in terms of revenues.
"We need to be seeing growth and Dell is such a big computer company that if they're seeing weak sales, that could be a problem," said Mr Peter Dunay, chief markets strategist and options specialist at brokerage Wall Street Access. "At the same time, if they're seeing orders picking up, you could see that helping Intel and some of the other" technology stocks.