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. Last Updated: 07/27/2016

Wall Street Investors Hold on Tight

APTraders working on the floor of the Brazilian Mercantile and Futures Exchange in Sao Paulo on Friday afternoon.
NEW YORK -- It was a weekend of high anxiety for investors on Wall Street, as they braced themselves for what was likely be another rollercoaster ride for the battered financial markets.

Any more signs of spreading losses tied to risky subprime mortgages are likely to send U.S. stocks into more of a tailspin this week, exacerbating calls for the U.S. Federal Reserve to ride to the rescue.

Global equity markets were roiled last week, as fears that a widening fallout from worsening lending conditions could take a bite out of economic growth and corporate profits swept through financial markets.

Worries that another shoe may drop in the global credit crisis escalated Thursday, after French bank BNP Paribas froze three debt funds because of the turmoil in subprime markets.

And analysts say there may be more trouble ahead.

"What will drive the market next week? One word: Subprime. We're in the midst of it," Chip Hanlon, president of California-based Delta Global Advisors, said Friday. "The only question is whether the Fed will let it run its course or will it come to the rescue -- and it is likely that it will come to the rescue."

Central banks rushed to pump extra cash into the financial system earlier in the week in an attempt to temper fears about the liquidity crisis that is gripping investors worldwide.

The Federal Reserve provided the banking system with a total of $38 billion in three separate moves Friday, the largest amount of liquidity since the days after the Sept. 11 attacks six years ago, adding ample funds for the second day running as financial markets fretted over credit conditions.

The Fed also took the unusual step of making a rare statement after the first operation in an effort to calm investors' fears.

"Depending on the level of credit stress next week, you could see more liquidity injections. The Fed has already shown that if they have to, they will," said Joseph Quinlan, chief market strategist at Banc of America Capital Management, in New York.

Despite the market's slide on Thursday and Friday, all three major U.S. stock indexes ended this volatile week higher.

For the year so far, stocks are still in positive territory. The Dow is up 6.2 percent, while the S&P 500 is up 2.5 percent and the Nasdaq is up 5.4 percent.

While a heavy week for economic data may pale against the backdrop of liquidity concerns, inflation data could be important in setting a parameter for what the Federal Reserve will do next.

"If you get strong inflation numbers, it puts the Fed in a difficult position, as the market wants them to cut, but they've made it very clear that their priority is inflation," Quinlan said. "But if the data shows lower-than-expected inflation, it would allow the Fed to cut sooner rather than later."

On Wednesday, the closely watched core consumer price index, which excludes volatile food and energy prices, is expected to rise 0.2 percent in July, matching June's gain. The producer price index, due on Tuesday, is expected to climb 0.2 percent.