Wall Street will get its first real taste of first-quarter earnings this week in the hope that they will show corporate America remains on the road to recovery.
After a relatively quiet confession season - a period when companies typically let Wall Street know if their results aren't going to measure up - expectations are high for solid profit growth.
The stock market's next big move hinges largely on whether corporate America can dish up what investors are hungry for - strong quarterly results and indications from corporate leaders that there is more good news to come in the months ahead.
"We'll be hoping for in-line if not better numbers coming out of corporate America," said Jack Caffrey, equity strategist at J.P. Morgan Private Bank.
Investors will also fixate on "whether management's can offer some positive commentary with respect to what they're seeing in their own businesses that makes us think that we have some sustainability," Caffrey added.
Stocks likely will start the week on solid footing, thanks to the exceptional strength of Friday's US jobs report, which helped reassure investors, who had been concerned about the economy after weeks of mixed messages.
The report, which showed employment grew at its fastest pace in four years, prompted speculation that companies are feeling confident enough about business conditions to take on new workers and drove stocks sharply higher.
All three major market gauges finished the week with big gains. The Dow Jones industrial average gained 2.5 percent, the broad Standard & Poor's 500 index rose 3 percent, and the technology-packed Nasdaq Composite Index gained 5 percent.
Aluminium producer Alcoa Inc will kick off next week's key earnings reports on Tuesday as the first of the 30 stocks in the blue-chip Dow average to issue first-quarter results.
Results are also due later in the week from fellow Dow component General Electric Co, Internet media company Yahoo Inc, drug-maker Abbott Laboratories Inc, and biotechnology company Genentech Inc. From the financial sector, a quarterly scorecard is due from SunTrust Banks Inc.
Wall Street analysts are expecting the companies in the S&P 500 to post an average gain of 16.9 percent in their first-quarter operating earnings, according to Thomson First Call. That number has risen steadily since the beginning of the year, when the consensus forecast was for a rise of 13.4 percent.
"We got through the pre-release season without any major concerns, and I think that most on Wall Street are optimistic that the earnings should come in pretty good for the first quarter," said Peter Gottlieb, president of Gottlieb Investment Management Corp. "And I think the expectation is that the tone that would be set for the rest of the year will be pretty good, as well."
There are just a few economic reports of note next week, but investors will be watching carefully for signs the economy is maintaining its strength.
Among the reports on tap is the Institute for Supply Management's non-manufacturing survey. This closely watched barometer of the services sector, due on Monday, is expected to show a rise to 61.5 in March from 60.8 in February, according to economists polled by Reuters.
Reports on import and export prices, wholesale inventories, and weekly jobless claims will also garner some attention.
While upbeat earnings news could help the market maintain a positive tone in the days ahead, several factors may keep a lid on the market's gains.
Stocks have already risen sharply since they hit their lows of the year in late March. The major market gauges have moved within striking distance of 2004 highs, meaning that a large portion of the good news may already be factored into stock prices.
Security jitters also have traders treading carefully. A failed bid to bomb a high-speed rail line in Spain that came just three weeks after deadly train bombings in Madrid stirred up fears, as well as growing tensions in Iraq following the killing of four American contractors.
A rapid rise in interest rates could rain on the stock market's parade. That's the worry, after the strong jobs data spurred speculation the Federal Reserve may raise interest rates as soon as this summer and sent bond yields sharply higher on Friday.
Higher interest rates could hurt companies in the financial and housing sectors because higher borrowing costs discourage consumers from buying new homes or refinancing their mortgages.
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