Source: The Canadian Press

Stock markets could find themselves smack in the midst of the summer doldrums this week as the second-quarter earnings season winds down and there are few major, market-moving economic reports due.

However, economic data last week gave investors plenty to think about, including more signals that gains will be hard to come by as the recovery stalls.

There has been “some very good news” in the form of a generally positive second-quarter earnings season, said Serge Pepin, director of investments at BMO Investments.

“But it’s being overshadowed by the gloom-and-doom attitude, a general malaise out there that there could be a double-dip recession, that the global economy will go back into recession,” Pepin added.

“We do not believe that. We really do believe that what we’re experiencing is a slowdown of economic growth, but still growth.”

This week, investors will get the latest reading on the Canadian manufacturing sector on Tuesday when Statistics Canada releases manufacturing shipments data for June. The numbers are expected to show that shipments declined by 1%, after rising for nine straight months, amid lower industrial product prices, flat U.S. industrial production and a decline in manufacturing-related exports.

And on Friday, the latest reading on inflation comes out. The Consumer Price Index is expected to be up 0.8% in July from June.

In the U.S., investors will get the July reading on housing starts on Tuesday. The housing sector has been weak, with starts tumbling 19% since the home buyers tax credit ended in April.

The U.S. government’s leading indicator, which forecasts where the economy will be about six months from now, comes out on Thursday, as does the Philadelphia Fed Index, which is a reading of regional manufacturing activity.

The malaise on stock markets deepened last week after the U.S. Federal Reserve confirmed what many investors already suspected — that “the pace of recovery in output and employment has slowed in recent months.”

Chinese data showed economic growth slowing to 10.3% in the second quarter from 11.9% in the first quarter, as Beijing removed stimulus measures in recognition that the world’s No. 3 economy quickly exited from the economic downturn.

On top of that, Mastercard’s CEO remarked that he sees “conflicting signals” about the recovery, while the CEO of tech bellwether Cisco Systems said he sees “mixed signals” about the economy.

It all added up to a 2.3% slide on the TSX last week while the Dow industrials gave back 3.28%.

“People have been focusing excessively I think on the bad news and it reflects the shaken confidence of investors,” said Norman Raschkowan, North American strategist at Mackenzie Financial Corp.

He calls the recent run of corporate earnings “phenomenal … but clearly that hasn’t been enough.”

“You really need something as basic as people seeing there’s a couple of months in succession of good job growth in the U.S. and people saying the economy isn’t going to come off the rails.”