Wall Street to test its rally

Investors will need strong stuff to post a fourth straight week of gains. Automaker bailout, G20 and key jobs report are on tap.

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By Alexandra Twin, CNNMoney.com senior writer

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NEW YORK (CNNMoney.com) -- Investors are looking to close out a surprisingly upbeat March on a high note and start off a make-it-or-break-it April on good terms as the spring rally hits some resistance.

"The outlook has become more optimistic over the last few weeks, but for the rally to continue, we'll need to see incremental positive news on the economy and corporate profits," said Christopher Colarik, portfolio manager at Glenmede.

Although first-quarter earnings aren't due to start pouring until mid-April, investors have been bracing themselves for what is expected to be a weak batch of results.

Concerns about profits and losses, particularly in the bank sector, took the wind out of the market rally's sails at the end of last week. Stocks managed to post gains for the five-day period, but only because of a massive upturn Monday after the Treasury Department announced its plan to buy up to $1 trillion in bad bank assets.

Since hitting 12-year lows on March 9, the broader S&P 500 (SPX) index has gained 20.6%, ending higher for three weeks straight.

As market pros debate how much longer the so-called bear market rally can last, contrarians believe that all the wariness will help the recent advance grow longer legs.

"For every one person who thinks this could be the start of a new bull market, there are 99 who think it's a dead cat bounce," said Tom Sowanick, chief investment officer at Clearbrook Financial.

"That skepticism forces people to capitulate into the market instead of out of it," he said.

This week brings reports on housing, consumer sentiment and manufacturing. The week's biggest potential market mover is Friday's March jobs report, which is expected to show that the economy lost more than 650,000 jobs for the month. The U.S. automakers' bailout dominates early in the week, and the G20 leaders of the world's largest nations meet toward week's end.

"Best Month" on Wall Street: The quarter ends Tuesday, and that tends to be a positive influence on equities, but April can be tricky.

March has been the best month on Wall Street for the Dow Jones industrial average (INDU) going back to 1950, according to the Stock Trader's Almanac. The Dow posted gains of 1.9% on average.

But in bear markets, April can be brutal. In 2002, right in the thick of the last bear market, the Dow lost 4.4% during the month.

On the docket

The announcement comes ahead of the Tuesday deadline for the companies to present viable business plans - a condition for them to receive additional taxpayer money. GM (GM, Fortune 500) is expected to get a 30-day extension, however, as it works to gain additional concessions from its union.

Tuesday: Reports are due on consumer sentiment, housing and manufacturing.

The Conference Board, a business research group, releases its closely watched Consumer Confidence Index in the morning. The index is expected to have edged higher to 27 in March after falling to an all-time low of 25, according to a consensus of economists surveyed by Briefing.com.

The S&P/Case-Shiller Home Price Index, a measure of 20 major metropolitan areas, is expected to have fallen 18.5% in February, after falling a record 18.55% in December.

The Chicago PMI, a regional read on manufacturing, is expected to have risen to 34.7 in March from 34.2 in February.

Wednesday: Reports are due on employment, manufacturing and housing.

The ADP National Employment Report is expected to show that private-sector employers are expected to have cut 648,000 from their payrolls in March after cutting 697,000 jobs in February. The report tends to move markets as it sets the tone for the federal government's bigger monthly payroll report Friday.

The Institute for Supply Management's manufacturing index is expected to improve modestly to 36.0 in March from 35.8 in February.

The February Pending Home Sales Index from the National Association of Realtors is expected to have fallen 2% after having fallen 7.7% in the previous month.

The federal government's February construction spending report and the weekly oil inventories report are also due Wednesday morning. March sales from the nation's automakers are due throughout the day.

Thursday: President Obama speaks with world leaders at the G20 meeting in London. He is expected to address worries about some of the U.S.'s economic policies and also push for greater financial regulation.

The weekly jobless claims report and February factory orders index, both from the U.S. government, are also due Thursday.

Friday: The week's biggest economic news is the Labor Department's March employment report. Employers are expected to have cut 656,000 jobs from their payrolls after cutting 651,000 in February. The unemployment rate, generated by a separate survey, is expected to have risen to 8.5% from 8.1% in February.

Federal Reserve Chairman Ben Bernanke speaks in the afternoon about the Fed's balance sheet. Bernanke appears at the Richmond Fed's credit markets symposium in North Carolina.

A report is also due from the ISM on the services sector of the economy. To top of page

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