Strong profits may ease inflation nag

US stocks could climb this week. Analysts expect companies to report strong profits as the quarterly earnings season gets into high gear.

But traders will keep a wary eye on rising oil prices and bond yields, which could limit any market gains.

If earnings and outlooks top analysts' forecasts, that could relieve some of the anxiety about inflation.

Investors are on inflation alert after oil rebounded to nearly US$70 a barrel last week, and benchmark US bond yields rose above 5 per cent for the first time in almost four years.

Wall St will get last month's data on inflation this week, when the Government releases the Producer Price Index tomorrow and the Consumer Price Index on Wednesday.

Stocks rallied through last month in expectation of a strong earnings season, driving major US stock indexes up near five-year highs.

"The rally has been based on strong earnings for the first quarter against higher energy prices and interest rates," said Marc Pado, US market strategist for Cantor Fitzgerald & Co. "That's the battle. And earnings tend to win out in April, historically."

Tech bellwethers Intel and Apple Computer , plus some big internet names, Google , Yahoo and eBay, will report quarterly results next week. That should give investors a better picture of the tech sector.

Also, a flurry of earnings reports is due from the banking sector this week.

- REUTERS