By Myra P. Saefong, MarketWatch
SAN FRANCISCO (MarketWatch) -- A raft of housing-market data and earnings from economic bellwether FedEx Corp. may offer investors fresh clues next week about the strength of the U.S. recovery.
Financial results from Oracle Corp. (ORCL) and Nike Inc. (NKE) and speeches from Federal Reserve officials may also take the spotlight next week.
"The economy is beginning to recover despite some doubters believing economic growth is temporary," said Michael Yoshikami, chief executive officer of Destination Wealth Management in Walnut Creek, Calif. "It's our view that a real recovery is in play and that will likely lead to additional market rallies."
U.S. economic data released in the past week were mostly positive, with a rise in February retail sales and manufacturing activity indexes and a dip in jobless claims fueling weekly gains among stocks.
On Friday, however, the University of Michigan and Thomson Reuters data showed that consumer sentiment dropped for the first time since August and the Labor Department reported that February's cost of living rose by the fastest pace in 10 months.
"U.S. economic news continues to be moderately positive overall," said Marshall Berol, co-manager of the Encompass Fund (ENCPX) "Plus, the markets are looking at the positives now and not the negatives."
The Dow Jones Industrial Average (DJI) closed at 13,232.62 on Friday, down 0.2% and the Nasdaq Composite (RIXF) shed 0.04% to end at 3,055.26, while the S&P 500 (SPX) climbed 0.1% to finish at 1,404.17.
All three indexes ended the week with gains of more than 2%.
The market's expecting to see sizable improvements in February housing starts and existing home sales, set for release on Tuesday and Wednesday, respectively.
Economists polled by MarketWatch expected a rise in new construction of houses to 708,000 in February from 699,000 in January and a climb in sales of existing homes to 4.60 million from 4.57 million.
Data on new home sales due Friday are expected to show an improvement to a 330,000 annual rate in February from a rate of 321,000 in January.
A gauge on home builder sentiment will be released on Monday, with economists polled by MarketWatch looking for the National Association of Home Builders/Wells Fargo Housing Market Index to remain at 29, the same reading from February.
"The improvement in the jobs market is leading to an early improvement in the housing market. That's why next week's numbers are potentially very important," said Phil Orlando, chief equity strategist at Federated Investors.
"There is a lot that is right with the housing market," said Orlando of the relative low-cost and ample supply. "What we had been missing was a sustainable job market. But because people are starting to feel better about their employment prospects, they are starting to think about housing again."
The coming housing data may have gotten a boost from "unseasonably warm weather, which has pulled forward some normal spring demand, due to historically lower interest rates and because of the various government stimulus programs," said Robert Barone, a portfolio manager and partner at Universal Value Advisors in Reno, Nev.
FedEx, Oracle on tap
Quarterly financial results are also on tap from Oracle on Tuesday, and FedEx Corp. (FDX), Micron Technology Inc. (MU) and Nike on Thursday.
Analysts polled by FactSet Research expect Oracle to post third quarter earnings per share of 56 cents on revenue of $9.0 billion.
"Following a disappointing F2Q [fiscal second quarter], we're looking for an in-line F3Q given mixed but overall solid feedback from resellers and customers. That feedback did, however, point to a number of strategic challenges Oracle now seems to face," analysts at Raymond James said in a note.
FedEx will also report its third-quarter results. Analysts expect the shipping company to report earnings of $1.35 per share, on revenue of $10.6 billion, according to analysts polled by FactSet Research. FedEx reported adjusted earnings of 81 cents a share and revenue of $9.7 billion for the third quarter a year ago.
Analysts expect Micron's fiscal second-quarter results to show a loss of 19 cents per share on revenue of $2.0 billion. A year earlier, it posted a profit of 7 cents a share on revenue of $2.3 billion.
Nike is expected to post a fiscal third-quarter profit of $1.16 a share on revenue of $5.8 billion. A year earlier, it reported earnings of $1.08 a share on sales of $5.1 billion.
U.S. investors will also review a parade of speeches from Federal Reserve officials.
The Fed on Tuesday kept interest rates at record lows, continued a program to swap assets it owns into riskier securities and downplayed the strength of recent economic data.
"Any kind of sentiment that expresses the idea that markets are improving and labor is healing at a faster pace than originally thought likely means the Fed may dampen expectations" for a third round of quantitative easing, said Michael Gayed, chief investment strategist at Pension Partners LLC.
The docket next week includes New York Fed President William Dudley's speech Monday in Melville, N.Y., on regional and national economic conditions. Fed Chair Ben Bernanke will offer brief opening remarks at a Fed conference on Friday and Fed Vice Chair Janet Yellen will moderate a panel of central banks on crisis the following Saturday.
"Markets will be watching for Federal Reserve comments to determine the future direction of interest rates," said Destination Wealth Management's Yoshikami. With a "split perspective" within the Fed on the future course of action regarding interest rates, "the bond market is particularly interest in Fed sentiment."