A little good news could bring some stability back to Wall Street this week as investors look for bargains amid chaos.
Then again, bad news could lead to continued volatility. It all depends on the news of the day.
The Dow Jones industrial average swung more than 400 points four days in a row last week, and jittery investors are looking to economic data for clues about where it's headed next.
Coming up this week are a raft of earnings from retailers, statistics on housing starts, jobless claims and industrial production, and a meeting between German and French leaders on worries about European government debt.
Wal-Mart Stores Inc. and Target Corp., report earnings on Tuesday and Wednesday and could provide a healing balm to investors. The retail chain results will be a key indicator because the stock market has frightened consumers and their spending is essential for the economy to recover, said Mark Luschini, chief investment strategist with Janney Montgomery Scott in Philadelphia.
"(Those results) will be telling as to whether the consumer is in a position to help power the economy forward," he said.
The recent sharp decline in the market means there are bargains to be had. Since the market's highs of April 29, the Dow is down 12 percent. The Standard & Poor's 500 index has fallen 9 percent since Aug. 1, mostly on worries about the U.S. economy and debt crisis in Europe.
Market pros likely will be hunting for bargains on Monday, especially in stocks that pay relatively high dividends since the Federal Reserve has said interest rates will stay low for the next two years, Luschini said.
Frank Pare, a financial planner with P.F. Wealth Management Group in Oakland, Calif., is telling his clients to hang on. Their portfolios are diversified between equities and fixed income investments, but they should still be ready for more volatility, he said.
Pare is also advising them not to follow the movements hour by hour.
"The first thing to do is turn off your television," he said. "If you're an investor, you really don't want to get caught up in the day-to-day because it will drive you crazy."
Even so, financial analysts say these are some of next week's most critical reports:
Wal-Mart's second-quarter report will give investors a look at consumer spending. Its sales from stores open at least a year, the standard for measuring a retailer's strength, have fallen for eight straight quarters in the U.S.
Analysts have said the declines resulted in part from mistakes it made in pricing and merchandising. Sales also have faltered because the main customers of Walmart stores are continuing to limit their spending and shift to online rivals or dollar stores, which offer convenience and good bargains.
Wal-Mart is considered the single most important bellwether of consumer spending because it accounts for nearly 10 percent of all nonautomotive retail dollars spent in the U.S.
The housing market got some good news in June: Single-family home construction rose 9.4 percent. It was the biggest increase since June 2009, when the recession officially ended. But analysts said the pace of 453,000 homes per year was still too depressed to signal a turnaround in the market.
The July number isn't expected to be as high, but economists say it will show the building industry is improving.
Although new homes represent just 20 percent of the overall housing market, they have a significant impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
Investors will get a reading on Spain's economic health on Tuesday. Europe's fourth-largest economy grew at an annual rate of 0.3 percent in the first quarter. It likely stayed sluggish in the April-June period. Spain's unemployment rate is the highest in the region at nearly 21 percent.
Still overhanging the markets is concern that Europe's debt crisis will spread through the U.S. financial system. There are worries that Italy and Spain, two of Europe's biggest economies, might be unable to pay all their debts.
If they couldn't, big European banks that hold huge amounts of government debt would be at risk of failure. That possibility, in turn, could harm many large U.S. banks with close relationships with their European counterparts.
Also on Tuesday, German Chancellor Angela Merkel and French President Nicolas Sarkozy will be meeting in an emergency session to discuss joint proposals on governance of the eurozone amid market worries about Europe's debt.
The weekly jobs report can cause big swings in the stock market. On Thursday, the Dow rose 423 points after the government said applications for benefits fell to 395,000. They had been at or above 400,000 for the previous 17 weeks.
The report cheered Wall Street traders, who were hungry for good economic news after jitters about U.S. growth and the financial crisis in Europe caused a string of market routs. Stock futures surged when the data were released.
Yet the outlook remains cloudy. The number of applications remains above the 375,000 level that analysts say would signal healthy job growth. And other recent data on economic growth, consumer spending and manufacturing output have been weak.