Wall Street may be on the defensive this week if reports on housing and growth suggest the United States economy is headed for an acute slowdown.

While sliding oil prices and the

Federal Reserve's decision to hold interest rates steady have supported the stock market's gains so far in September, recent signs that the economic slowdown could prove severe have stirred anxiety on Wall Street and Main Street. Strategists said the surprisingly steep drop in the Philadelphia Federal Reserve Bank's business activity index this month brought growth concerns into sharper focus. The fear is that fallout from a slowing housing market could stymie economic growth and hurt corporate profits.

We know housing is a problem, said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

So what happens is you need other parts of the economy to offset it and if those other parts of the economy, particularly manufacturing and service industries, are not going to hold up, then you have a much larger potential problem developing.

As a result, stocks are likely to struggle to extend their recent climb. Last Wednesday, some strong earnings and the Fed's decision to keep interest rates unchanged for the second month in a row drove the Standard & Poor's 500 Index (^SPX - news) up briefly to a 5-year intraday high at 1,328.53. The Fed's move last week marked an extension of its pause on August 8, after a cycle of 17 rate increases since June 2004.

With several Fed officials set to speak this week, investors could become more cautious, strategists said.

HOME SALES,

GDP AND PRICES

This week's economic data could help investors assess the likely magnitude of the economic slowdown, with August figures on existing and new home sales and the final reading on second-quarter gross domestic product on tap.

Existing home sales and new home sales will be the big ones, said Paul Nolte, director of investments at Hinsdale Associates, in Hinsdale, Illinois. How much off of expectations those two numbers are will go a long way in determining the market.

Economists polled by Reuters believe existing home sales slowed in August to an annualized rate of 6.18 million units from 6.33 million in July. That report is due on Monday. New home sales in August are seen at an annual pace of 1.04 million units, below July's 1.072 million, the Reuters poll showed. New home sales are due on Wednesday. The final estimate of second-quarter GDP is expected to show the U.S. economy grew at an annual rate of 2.9 percent. The GDP data will be released on Thursday. The August core personal consumption expenditures price index, or the core PCE price index, will be released on Friday. Often called the Fed's favorite inflation gauge, the core PCE price index excludes volatile food and energy prices. Economists polled by Reuters see the August core PCE price index up 0.2 percent, after July's gain of 0.1 percent. Personal income in August is forecast to rise 0.3 percent, while personal consumption is seen up 0.2 percent. Last week, the Fed's policy-setting committee said inflation pressures seem likely to moderate over time. But the Fed left the door open to future interest-rate increases if inflation proves menacing. This week's economic indicators include the September consumer confidence index on Tuesday, August durable goods orders on Wednesday, and the University of Michigan's final reading on September consumer sentiment on Friday. The Chicago Purchasing Managers' Index, a gauge of Midwest manufacturing activity known as the Chicago PMI, will be released on Friday. Forecast: 56.0 in September vs. 57.1 in August. The Chicago PMI's prices-paid component will be watched for any signs of inflation.

STOCKS UP FOR SEPTEMBER

Stocks had risen sharply since the start of the month, with the S&P 500 and the Dow Jones industrial average (^DJI - news) attempting to stage their biggest September advance in eight years as crude prices dropped.

But on Friday, growth concerns rattled stocks. For the week, the blue-chip Dow average fell 0.46 percent, while the broad S&P 500 shed 0.39 percent and the Nasdaq Composite Index (^IXIC - news) lost 0.75 percent.

For September so far, stocks are still in the winner's circle: The Dow is up 1.12 percent, the S&P 500 is up 0.84 percent, and the Nasdaq is up 1.61 percent.

For the year to date, the Dow is up 7.38 percent, the S&P 500 is up 5.33 percent and the Nasdaq is up 0.62 percent.

Oil prices have fallen about 14 percent this month, with U.S. November crude settling on Friday at $60.55 a barrel.

NYMEX crude is down about 23 percent from its record of $78.40 a barrel on July 14.

A NUMBERS GAME

The numbers so far have been quite clear, whether you are talking about a hard landing or a soft landing, that basically the economy is moderating, said Subodh Kumar, chief investment strategist at CIBC World Markets, in Toronto.

People should think in terms of the leadership that took place in stocks during the third quarter continuing. The real leadership is in sectors that have lagged, like health care, staples and telecoms, with less focus on cyclical companies.

The third-quarter earnings reporting season doesn't kick off until Alcoa Inc. (NYSE:AA - news) reports on October 10. But a handful of companies will deliver their quarterly results this week, including drugstore chain Walgreen Co. (NYSE:WAG - news)

Other companies set to report earnings this week include Jabil Circuit Inc. (NYSE:JBL - news) , a maker of electronic components for cell phones and computers; home builder Lennar Corp. (NYSE:LEN - news); Paychex Inc. (Nasdaq:PAYX - news), one of the largest U.S. payroll processors, and spice producer McCormick & Co. Inc. (NYSE:MKC - news).

AND NOW, A WORD FROM THE FED

The Fed's roster of speakers this week includes Richard Fisher, president of the Federal Reserve Bank of Dallas. On Monday, he is scheduled to address a forum in Mexico about the current state of the U.S. and Mexican economies.

On Tuesday, Federal Reserve Board Governor Susan Schmidt Bies will testify on Tuesday at a Senate Banking Committee hearing in Washington.

Federal Reserve Bank of Kansas City President Thomas Hoenig will speak on Wednesday about monetary policy and the economic outlook at a forum in Nebraska.

On Friday, Federal Reserve Bank of St. Louis President William Poole will speak on Data Dependence at a conference in Tennessee.

Michigan Inflation