Profit reports from top retailer Wal-Mart Stores and Hewlett-Packard, both slated for release on Tuesday, could provide new insight on consumer sentiment.
However, while clear help for beleaguered bond insurers could spark a relief rally in stocks, there is little on the horizon to break the bearish bias, said Joseph Battipaglia, market strategist at Stifel Nicolaus in Yardley, Pennsylvania.
"The only thing near-term that can give the market some comfort is a comprehensive work-out plan for the (bond) insurers," Battipaglia said. "Outside of that, however, the market is really trendless with no leadership," he said.
"Sentiment is still negative; there's a lack of commitment and conviction on the part of cash buyers to put money to work and the news next week is probably not going to excite anybody."
U.S. financial markets will be closed for the Presidents Day holiday Monday.
Still Searching for the Bottom
Fear of recession and morass in credit markets caused by a slumping U.S. housing sector have spooked investors and kept stocks, especially financials, under water so far this year.
Reports of softer store traffic at Best Buy in January and a decline in a consumer sentiment index to 16-year lows pushed the Dow and Nasdaq lower Friday.
However, the benchmark Standard & Poor's 500 Index rose on a rally in food stocks spurred by news of a stake that Warren Buffett's Berkshire Hathaway took in Kraft Foods.
The Dow Jones industrial average fell 28.77 points to 12,348.21 on Friday, as the S&P 500 gained 1.13 points at 1,349.99 and the Nasdaq Composite Index fell 10.74 points at 2,321.80.
For the week, the S&P 500 and the Dow both added 1.4 percent, while the Nasdaq climbed 0.7 percent.
The release of economic data generally cause stock market indexes to budge, but the outlook remains lower, said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
"We're still searching for the bottom, but the bottom line; the trend is down," Saluzzi said. "You'll catch your rallies here and there, but right now we're in a down trend."
A fresh look at housing comes Tuesday when the National Association of Home Builders releases its homebuilder sentiment index. The NAHB/Wells Fargo Housing Market index for February is expected to show a reading of 19, the same in January.
Readings under 50 mean more builders view market conditions as poor than favorable.
On Wednesday, the Labor Department will release its Consumer Price Index for January, which economists in a Reuters survey expect to show rose 0.3 percent. Core CPI, which strips out volatile food and energy items, is expected to gain 0.2 percent.
Also that day, the text of minutes from the meeting of the Federal Open Market Committee on Jan. 29-30 will be released.
On Thursday, the Philadelphia Fed's business activity index for February is expected to show a reading of negative 11 compared with negative 20.9 in January.
Analysts expect Hewlett-Packard, the world's top PC-maker, to report higher quarterly profits on Tuesday, but they also expect a muted forecast amid slowing demand for computer hardware as companies trim spending on technology.
Profit also is expected to rise at Wal-Mart, the world's largest retailer, despite a charge for its Japanese operations, as penny-pinching shoppers search for low prices on necessities like food and laundry detergent to offset the slumping U.S. economy.
Despite a dark cloud hanging over the stock market, there are pockets of the consumer economy that still have money, snapping up PDAs, GPS devices and iPhones, said Zachary Karabell, senior economist at Fred Alger Management.
Also, many companies have strong balance sheets and are ripe to make strategic purchases, and sovereign wealth funds are ready to invest, he said.
"The disconnect in these markets between things that are doing well and things that are doing badly is huge," Karabell said.