Source: The Canadian Press

Corporate earnings will likely set the tone on the Toronto stock market this week amid a dearth of market-moving economic data.

Some of the biggest Canadian names will report results, including Rogers Communications (TSX:RCI.B), gold miners Kinross Gold (TSX:K) and Agnico Eagle (TSX:AEM) and Talisman Energy (TSX:TLM) on Wednesday.

Oil explorer Nexen Inc. (TSX:NXY) and Barrick Gold, (TSX:ABX) the world’s biggest gold miner, report Thursday.

The TSX finished last week little changed as earnings failed to provide lift, with investors driving share prices lower in companies as diverse as Canadian Tire Corp. (TSX:CTC), BCE Inc. (TSX:BCE), Air Canada (TSX:AC.B) and Manulife Financial (TSX:MFC), even as all reported sharply higher profits.

But analysts point out that investors’ expectations are rapidly rising and are much harder to please than in past quarters as economic conditions improve.

“The bar is now starting to go up,” said Andrew Pyle, investment adviser with ScotiaMcLeod in Peterborough, Ont., noting that easy year-over-year comparisons are about to become a thing of the past.

“And as you’ve seen this quarter, some companies just couldn’t get over the bar and I think there will be less companies getting over the bar in the next quarter and that probably is going to be the catalyst for this market to either what I would say plateau or consolidate or pullback.”

Last week left the TSX up about three per cent for the first six weeks of 2011, the Dow industrials were ahead about six per cent.

That followed a 14% advance in Toronto last year and markets have been running steadily higher since the most recent lows of last summer.

And that suggests to analysts that markets are due for a breather.

“We had an extraordinarily strong close to last year, you had a strong beginning and markets are invariably two steps forward, one step back,” said Robert Gorman, chief portfolio strategist at TD Waterhouse.

“So I think we’re likely going to see that, it’s close to inevitable. It could be precipitated by anything. We do see rising bond yields and that has adverse impact.”

But Pyle doesn’t mean investors should brace for a stomach-churning correction of around 20%.

Rather he thinks “a consolidation between 13,000, 14,000 is in the cards here for the next couple of months, with the risk being that we do actually pull back below 13,000 and then we’ll start talking about correction.”

TSX energy sector investors will also be watching how oil prices perform this week. Prices have been volatile this month, rising as high as around US$92 a barrel amid unrest in Egypt that culminated Friday in the resignation of president Hosni Mubarak.

But the premium applied over concerns about the Suez Canal remaining open and unrest spreading to oil-rich Mideast countries unwound rapidly and crude fell almost four per cent last week to a 10-week low of US$85.58 a barrel.

The prime economic report next week are U.S. retail sales data for January, which comes out on Tuesday. Economists expect sales rose by 0.6% during the month, the same increase seen in December.

“We’ve come off some pretty decent months which some may put down to luck but I think we’ve got some weather effects to deal with in January,” said Pyle.

“This could be a month where you get some disappointment on the sales front.”

In Canada, investors will be looking to the latest reading of inflation at the end of the week.

Statistics Canada is expected to report that the consumer price index rose by 0.2% in January, driven largely by rising food and energy prices. Economists say the small gain would push the annualized rate down to 2.3%, from 2.4% the previous month.