Markets: Shaky after the slump

NEW YORK (CNNMoney.com) -- Wall Street avoided a bigger walloping late last week, with sellers finally calling it quits after a nearly 10% plunge in less than three weeks. But the week ahead could be pivotal as investors either jump back in - or retreat even further.

The week ahead brings quarterly earnings from consumer companies Walt Disney and Coca-Cola, as well as economic reports on retail sales, inventories, employment and consumer sentiment.

Debt fears in focus: Worries that Greece will default on its debt, causing a domino effect in other debt-strapped European nations, pummeled U.S. stocks last week. Investors ditched risk and embraced the U.S. dollar and government debt as they worried that a U.S. economic recovery is too fragile to withstand an upheaval across the Atlantic.

But the declines followed weakness in late January, all of which set the S&P 500, Dow and Nasdaq close to 10% below rally highs hit late last month. A 10% selloff is technically a correction, and investors managed to slow and then stop the selling before the market hit such levels late Friday.

"You've clearly got some negative sentiment and legitimate concerns," said Phil Orlando, chief equity market strategist at Federated Investors. "But that doesn't mean the market should be down 10% and continue falling. If we are able to traverse the concerns, we can return the focus to fundamentals, which are starting to improve."

He pointed to the batch of better-than-expected fourth-quarter earnings and some of the recent reports that show the economy is continuing to stabilize, although the job market remains battered.

The challenge is going from an economic recovery that is largely stimulus driven to one that is driven by fundamentals, said Robert Siewert, portfolio manager at Glenmede. "People are questioning the fundamentals."

He said that the issue going forward is "how sustainable corporate earnings and GDP are going to be when we haven't yet seen a fundamental improvement and when we still see systemic problems overseas."

Quarterly results: As the quarterly reporting period winds down, just a few market-moving names are scheduled for this week.

Dow components Coca-Cola (KO, Fortune 500) and Walt Disney (DIS, Fortune 500) are expected Tuesday, while Sprint Nextel (S, Fortune 500) is Wednesday.

Coke is expected to have earned 66 cents per share up from 64 cents a year ago. Disney is expected to have earned 39 cents per share, down from 41 a year ago. Sprint Nextel is expected to have lost 19 cents per share after earning 24 cents per share a year ago.

With 314 companies, or 63% of the S&P 500, having reported results, earnings are on track to have risen 206% versus a year ago and revenues to have gained 7%, according to the latest results from tracker Thomson Reuters.

The year-over-year jump is partly due to an abysmal fourth-quarter 2008, at the height of the financial crisis. Unsurprisingly, financial companies are leading the recovery in quarterly results.

Stripping out the financial sector, earnings are expected to have risen 16% versus a year ago, while revenue is expected to have risen 2%.

Results have largely been positive, with 74% of companies beating earnings forecasts and 71% beating revenue forecasts.

Monday: There are no market-moving reports scheduled.

Tuesday: The Commerce Department is expected to report in the morning that wholesale business inventories for December fell 0.6% after falling 1.5% in the previous month.

Wednesday: The December trade balance from the Commerce Department is due before the market open. The trade gap is expected to have narrowed to $35 billion from $36.4 billion.

The January Treasury budget, due out in the afternoon, is expected to have narrowed to $60 billion from $91.9 billion in December.

The weekly crude oil inventories report from the government is also due in the morning.

The House Financial Services Committee holds a hearing on the unwinding of Federal Reserve liquidity programs that were put in place to help temper the blow of the recession. Fed Chairman Ben Bernanke is due to testify.

In the afternoon, the House Oversight Committee holds a hearing on Toyota (TM). The company has recalled more than 8 million vehicles due to safety issues with its gas pedal.

Thursday: The January retail sales report is due shortly before the start of trading. Sales are expected to have risen 0.4% after falling 0.3% in December. Sales excluding autos are expected to have risen 0.4% after falling 0.2% in December.

The government's business inventories report for December, due out after the start of trading, is expected to have risen 0.4% after rising 0.4% in the previous month.

The weekly jobless claims report from the Labor Department is also due in the morning.

Friday: The University of Michigan's consumer sentiment index for February is expected to have risen to 74.8 from 74.4, according to forecasts.