Wall Street looks to US consumers for direction

Tax rebates have historically been helpful in boosting the economy, but they only really work if they're used to buy goods and services. With many consumers weighed down by debt and saving up to keep up with the cost of basic necessities, some market experts are concerned that what's best for most individuals -saving their rebates -might not end up helping the broader economy.

Whether the average consumer feels financially healthy could determine whether the economy gets that late-2008 lift that so many investors have been betting on.

On Tuesday, the Commerce Department reports on retail sales in April. Economists surveyed by Thomson Financial/IFR estimated, on average, that sales dipped by 0.1 percent last month after growing by 0.2 percent in March.

Also this week, several big retailers -Wal-Mart Stores Inc., Macy's Inc., JCPenney Co. and Kohl's Corp. -release their first-quarter results, along with outlooks for later in the year.

After seeing last week's batch of mixed April sales figures from individual retailers, Wall Street knows that spending remains weak, but investors want more information. Retailers have made clear that consumers are changing their spending habits to accommodate the rising cost of energy and food, but no one knows how long these conditions will last.

Investors will learn more about the inflation consumers face when the Labor Department releases its consumer price index Wednesday. The index is expected to have risen by 0.3 percent in April after increasing by a similar amount in March. Core consumer prices, which strip out food and energy, are expected to have climbed by 0.2 percent after rising at the same pace the previous month.

Last week was a downbeat one in the stock market, with the major indexes retrenching following three straight weeks of gains as a few poor earnings results and surging oil prices weighed on investors. The Dow Jones industrial average sank 2.39 percent, the Standard & Poor's dropped 1.81 percent, and the Nasdaq composite index slid 1.27 percent.

Crude oil soared by about $10 last week to settle near $126 a barrel, yet another all-time high. Meanwhile, the average roadside price for a gallon of gasoline jumped above $3.67.

Market experts are split over whether oil prices will remain at these levels, surge higher, or collapse, so stock traders will continue to monitor the energy markets closely.