UPDATE 1-Wall St Wk Ahead: Fannie, Freddie, data to rule stocks

(Updates with U.S. help for Fannie and Freddie)

By Ellis Mnyandu

NEW YORK, July 13 (Reuters) - This week is almost sure to be another rocky ride for the U.S. stock market.

The week kicked off on Sunday when the United States announced bold measures to support Fannie Mae (FNM.N) and Freddie Mac (FRE.N), government-sponsored home finance companies that own or guarantee about one in two mortgages in the United States. Fannie and Freddie's shares were hammered last week amid mounting fears of capital constraints and played a major role in the market's weekly decline.

The Treasury and Federal Reserve unveiled sweeping steps to shore up the troubled mortgage financing giants if need be and head off a potential meltdown in global financial markets.

The Fed said the companies could access its discount window for emergency cash. The Treasury separately said that it would temporarily increase its line of credit to the two, as well as purchase equity in them, if needed.

The move by the Fed echoed its emergency action to help rescue investment bank Bear Stearns in March, when it opened the discount window emergency lending facility to investment banks for the first time since the Great Depression.

"This action over the weekend by the Fed and other government agencies shows that the government is trying to shore up not only the financial system but to create confidence in the U.S. equity market," said Scott Fullman, director of derivative investment strategy at WJB Capital Group in New York.

"The question now is whether the confidence can be sustained and if there are more skeletons in the closet."

Apart from Fannie and Freddie, Wall Street will also focus on Federal Reserve Chairman Ben Bernanke this week, when he is scheduled to appear twice on Capitol Hill to give his semiannual testimony on monetary policy. He is set to testify on Tuesday before the U.S. Senate Banking Committee, and on Wednesday before the U.S. House Financial Services Committee.

Investors will latch on to anything Bernanke says about the U.S. economy, inflation and interest rates.

"The bottom line is that we're in the middle of a financial tsunami. This is a storm the likes of which this country hasn't seen," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey. "The market right now needs to see results. It no longer gives anyone the benefit of the doubt."

Fannie Mae and Freddie Mac, which own or guarantee almost $5 trillion in mortgages and package them into bonds, face mounting losses from loan delinquencies and foreclosures. Investors feared last week that if they were hampered from doing business, the paralysis would worsen the housing crisis.

This week also brings a torrent of numbers from earnings reports and economic indicators. It will be one of the busiest weeks for quarterly earnings, with reports from Dow component Citigroup (C.N), the No. 1 U.S. bank, and technology bellwether Google (GOOG.O), the leading Web search company.

Making the terrain even more treacherous for stock investors are worries about oil and inflation. On Friday, oil shot up to a record above $147 a barrel. This week, investors will scrutinize data on consumer and producer prices for signs of rising inflationary pressures.

Major economic reports on tap include the U.S. Producer Price Index and the Consumer Price Index, industrial production and capacity utilization, and housing starts.