Last week's economic reports showed strong retail sales, strong industrial output and a sizable rise in business inventories, while a record trade deficit clouded the picture for the second month in a row. Despite the strong domestic demand the back-to-back record trade deficits should still provide enough of a drag on the economy to keep the Fed limited on future interest rate hikes.

The markets last week were trying to stop the bleeding after the rough start for 2005. The Dow fell another 46 points for the week and is down 2.1% for the year, while the NASDAQ lost just 1 point for the week and is now down 4% in two weeks. The S&P 500 lost nearly 2 points, and is down 2.3% this year. The only index putting in a positive week was the Russell by adding 4 points, but is still down 5.2% for 2005.

Favorable earnings reports from big tech names like Intel (INTC) and Apple Computer (AAPL) were buffered by disappointing results from Sun Microsystems (SUNW) and Cree (CREE). The direction Wall Street will take is questionable at this juncture until this week when a flood of earnings will be released.

Tuesday morning big names like 3M Co. (MMM), Abbott Labs (ABT), Bank of America (BAC), Citigroup (C) and Wells Fargo (WFC) all will report. After the close Tuesday, Advanced Micro (AMD), Juniper Networks (JNPR), Motorola (MOT) and Yahoo! (YHOO) report results. Wednesday morning, General Motors (GM), JPMorgan Chase (JPM) and Pfizer (PFE) report results. After the close, eBay (EBAY) and Qualcomm (QCOM) announce their results. Thursday morning, AT&T (T) and Ford Motor (F) report results. After the close, KLA-Tencor (KLAC) and Xilinx (XLNX) release earnings. Yahoo and eBay results will be heavily influenced by advertising revenue, as advertisers paid 24% more in Q4 than in Q3. Hewlett Packard (HWP) holds their Annual Shareholder Meeting on Tuesday. Thursday the Semiconductor Book-to-Bill Report is released, shedding light on the demand for chips. The Semiconductor Index (SOX) is already down 7% so far this year.

The economic releases this week start off Tuesday morning with the New York Empire State Index released, followed Wednesday by the December Consumer Price Index (CPI) and December Housing Starts. Crude Inventories will also be reported on Wednesday, as will the Fed’s Beige Book. Last week, oil rose $3.28 to close at $48.53. Thursday the Weekly Jobless Claims and December Leading Economic Indicators are reported, while Friday, the January Michigan Consumer Sentiment Index will be announced.

Stay tuned!