NEW YORK (CNNMoney) -- Investors have hunkered down in defensive mode and that trend will continue in the week ahead, which includes a smattering of economic data and the minutes from the most recent Fed meeting.
"Investors have turned a little more nervous since uncertainty is starting to creep back into the picture," said Michael Sheldon, chief market strategist at RDM Financial Group.
Just two weeks ago, stocks were sitting at the highest levels in nearly three years. But the tide has started to change as investors brace for the conclusion of Fed's bond buying program at the end of June.
Commonly known as QE2 , the central bank's program has pumped $600 billion into the financial system since it launched in November. During that time the Dow () has surged almost 20%, while the S&P 500 ( ) and Nasdaq Composite ( ) have added more than 11%.
That optimism seems to have waned this month, with all three major indexes down almost 2% in May.
"Markets traded lower following the end of QE1 so there's a good possibility that we'll see increased volatility during the next few weeks as we get closer to the end of QE2," said Sheldon.
This week, investors will comb through minutes from the Federal Reserve's meeting last month for clues about how concerned the central bankers are....or aren't...about inflation.
They'll also continue to keep a close eye on the dollar, which has strengthened recently in part because of renewed worries about Europe's debt woes.
All of that uncertainty has prompted investors to shift into more defensive areas of the market, including health care, utilities and consumer discretionary stocks, which are now outperforming the broader market.
Monday: A number of major retailers report earnings results this week. Department store J.C. Penney (Fortune 500) and home improvement chain Lowe's ( , Fortune 500) deliver results before the market opens.,
The Empire Manufacturing survey is also due before the start of trading. The regional reading on manufacturing is forecast to have slipped to 18 in May from 21.7 in April, according to consensus estimates from Briefing.com.
After the opening bell, the National Association of Homebuilders is scheduled to release its housing market index for May. The index is forecast to remain unchanged at 16.
Tuesday: A report on April housing starts and building permits comes out in the morning. Economists expect that 563,000 homes broke ground in the month, up from 549,000 in March. Building permits are expected to slip to 590,000 from 594,000 the previous month.
Earnings from Dell (Fortune 500) are due after the closing bell.,
Wednesday: Discount retailer Target (Fortune 500) is forecast to report a profit of $668 million on sales of $16 billion, up 3% from a year ago.,
In the afternoon, investors will turn their attention to meeting minutes from the Federal Reserve's April meeting for hints on how the Fed will bring its QE2 program to a close.
Hewlett-Packard (Fortune 500) posts results after the market's close.,
Thursday: The government's weekly report on initial claims for jobless benefits is expected to show a drop to 420,000 from 434,000 in the previous week.
No change is expected from the April index on leading economic indicators, following a 0.4% rise the month before.
Also out in the morning is the Philadelphia Fed index for May, a regional reading on manufacturing. The index is forecast to fall to 18, from 18.5 the previous month.
The National Association of Realtors will release its April reading existing home sales. Economists are looking for home resales to rise to an annualized rate of 5.2 million units, from 5.1 million in March.
On the earnings front, Sears Holdings (Fortune 500) is expected to announce results in the morning, while Gap ( ) will report in the afternoon.,
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