The March US employment report and other key economic numbers next week could help US stocks resume their recent winning path as long as that data hits the sweet spot: Not strong enough to add to worries about further interest rate hikes, yet not weak enough to cause concern about a recession.
Reports on the housing market could also draw investors' attention given recent sharp gains in homebuilder stocks.
Major indexes remain well above their 2016 lows, thanks to evidence of a reviving US economy and a sharp rebound in oil prices, even as stocks broke a five-week streak of gains on Thursday, their last trading day before a long holiday weekend.
While the volatility that marked the start of the year has diminished and many strategists have adopted a cautiously optimistic outlook, the market seems to have paused.
A catalyst could come from corporate earnings.
"What we've seen over the past couple of weeks is really just a return to normal," said Brad McMillan, chief investment officer for Commonwealth Financial in Waltham, Massachusetts.
Stocks' next big move will largely depend on earnings, he said. "We're kind of in a show-me phase, and it's got to be earnings."
First-quarter earnings estimates have collapsed since the start of the year, and in some cases may have fallen too far, possibly setting the stage for an upbeat profit season, McMillan and other market watchers said.
US earnings are expected to be down for a third consecutive reporting period, Thomson Reuters data shows. Analysts now expect a first-quarter earnings decline of 6.9 percent - which would be the biggest drop since the third quarter of 2009 - sharply below the 2.3-percent gain they had been projecting as recently as January 1.
Stabilising oil prices could at least slow the rate at which future earnings estimates fall, McMillan said.
Recent weakness in the US dollar could help, as well. US multinationals were hit hard by sharp gains in the US dollar last year but the dollar index is down 2.6 percent so far in the first quarter.
"We're seeing the strong dollar trade unwinding a bit, and that has helped those beaten-down areas really take off," said Adam Sarhan, chief executive of Sarhan Capital in New York, referring to commodity-related shares.
Some early results are trickling in, but the earnings season is still weeks away for the bulk of Standard & Poor's 500 companies.
Next week's economic data could also bolster or hurt the market, depending on how it signals the next step for Federal Reserve policy.
Comments from Fed officials this week, hinting at a slightly more aggressive rate hike path than investors have been expecting, dampened some enthusiasm for stocks. Strong economic data could signal a more aggressive Fed - considered a negative for stocks.
For next Friday's jobs report, a Reuters poll shows nonfarm payrolls expected to have increased by 200,000 jobs in March, which would be below February's gains of 242,000 jobs. Housing data will include pending home sales as well as the S&P/Case-Shiller price index. Next week also marks the end of the quarter, one of the most turbulent in the market's history. The S&P 500 is down just 0.7 percent for the quarter now, having recovered much of the first few weeks' steep losses.
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