NEW YORK — Corporate America's strong profits helped drive the Dow Jones industrials past 13,000 for the first time last week, but investors will want to see if U.S. consumers also have financial muscle before pushing stocks much higher.
In addition to more earnings data, market participants will be examining this week's data on personal spending and the job market. Now that the Dow has gained more than 760 points since April began, some investors are proceeding cautiously — upcoming data showing the economy is slowing too quickly or that inflation is getting out of control could trigger a sell-off. High inflation keeps the Federal Reserve from lowering interest rates, which would boost spending.
Currently, though, Wall Street is optimistic: first-quarter earnings data have shown about two-thirds of Standard & Poor's 500 companies beating analyst estimates, and most economic data have presaged cooling growth but not recession. Even a lower-than-expected reading on first-quarter gross domestic product failed to stifle the Dow's climb Friday, and the blue-chip index hit its 37th record close since October.
The Dow was up 1.23 percent for the week; the S&P 500 index was up 0.65 percent; and the Nasdaq composite index was up 1.22 percent.
On Monday, the Labor Department reports on personal spending, income, and core personal consumption expenditures inflation — a gauge of cost of living. The market expects that personal income for March rose 0.6 percent, the same as February; personal spending rose 0.4 percent, lower than the 0.6 percent in February; and core PCE inflation was 2.1 percent year-over-year, down from 2.4 percent the previous month, according to the median estimate of economists surveyed by Thomson Financial.
Later, on Friday, the Labor Department reports on nonfarm payrolls and unemployment. Economists forecast that nonfarm payrolls rose by 135,000 in April, less than 180,000 in March, and that the unemployment rate rose to 4.5 percent from 4.4 percent.
In addition to personal spending and income, investors on Monday will be looking at the Chicago Purchasing Managers Index of regional manufacturing and the Commerce Department's construction spending report. Economists expect the April Chicago PMI to fall to 52.0 from 61.7 in March, and March construction spending to edge up 0.3 percent after a similar gain in February.
Tuesday, the Institute for Supply Management releases its index on U.S. manufacturing. Economists expect the April index to come in at 51.0, indicating slow expansion. Also Tuesday, the National Association of Realtors reports on pending sales of existing homes in March, and automakers release their April sales.
Wednesday, the Commerce Department reports on factory orders, which the market is expecting to have risen 1.0 percent in March, after a similar gain a month earlier.
Thursday, the Labor Department releases its measure of worker productivity, and the Institute for Supply Management releases its service sector index. Economists forecast that productivity rose 1.1 percent in the first quarter, less than the 1.6 percent gain in the fourth quarter. They expect the ISM's April service sector index to register at 53.5, suggesting slightly faster growth than March's reading of 52.4.
So far, 22 of the 30 Dow components have reported earnings, and 16 of those have beaten expectations. This week, three more Dow component companies will release results from the latest quarter: Verizon Communications Inc., Procter & Gamble Co. and General Motors Co.
On Monday, analysts predict Verizon will post a profit of 54 cents a share. The stock closed last Friday at $37.89, at the upper end of its 52-week range of $29 to $38.77.
On Tuesday, the market expects Procter & Gamble to report a profit of 74 cents a share. The stock closed last Friday at $62.98, in the upper half of its 52-week range of $52.75 to $66.30.
On Thursday, General Motors is expected to release results showing a profit of 87 cents a share. The stock closed last Friday at $31.56, in the upper half of its 52-week range of $22.29 to $37.24.
Other major companies releasing quarterly financial results this week include Time Warner Inc., CBS Corp. and Eastman Kodak Co.