Wall Street: Flat is good
Investors are in for a week of heavy economic news. With optimism waning, can the market hold its ground?
NEW YORK (CNNMoney.com) -- Investors will return from the long weekend for what could be a pivotal moment on Wall Street.
Stocks have been in somewhat of a holding pattern recently, ending last week essentially flat, after the major indexes rallied some 30% from the lows of early March.
The sense of economic optimism that propelled the market higher over the last few months has faded, and investors are now looking for more concrete signs of recovery.
If no such signs emerge, analysts say the market could be in for a significant pullback. But if the outlook brightens, a painful selloff may be avoided.
"The market will be looking to see if there's actually something fundamental behind the 30% rally," said Abigail Doolittle, a portfolio manager at Johnson Illington Advisors. "If there is, maybe these levels can be sustained."
Next week brings a host of key indicators that could put the economic picture into sharper focus. Also the fate of General Motors, a major uncertainty on Wall Street, may become more clear as the automaker's restructuring efforts kick into high gear.
The market will also have to contend with lingering concerns about the credit ratings of some major economies. Last week, ratings agency Standard & Poor's lowered its outlook for the United Kingdom, raising concerns about the credit worthyness of the United States as the governemnt expands record deficts.
That said, another week of treading water could be considered a victory. Some market pros think a period of "sideways" trading could be healthy. It suggests the market is "building a base" from which stocks can eventually move higher.
"The market is coiling for a significant move, but the longer it stays firm, the more likely the next leg will be higher," said Nick Kalivas, equity analyst at MF Global in Chicago.
Monday: Markets closed for Memorial Day holiday.
Tuesday: The Conference Board, a private business research group, will release its monthly report on consumer confidence shortly after the opening bell. Economists think confidence rose in May, with the index climbing to 42 from 39.2 the month before.
The S&P/CaseShiller Home Price Index, which tracks 20 of the largest housing markets, is expected to show prices fell 18.4% in March after a record 18.63% drop the month before. The index is due at 9 a.m. ET.
General Motors (GM, Fortune 500) bondholders face a deadline to make concessions under the troubled automaker's restructuring plans. GM could face bankruptcy at the end of this month if its turnaround efforts fall short of government requirements.
Wednesday: An industry report is expected to show sales of existing homes increased slightly in April. The report from the National Association of Realtors is due at 10 a.m. ET.
Office supply retailer Staples (SPLS, Fortune 500) is due to report earnings before the opening bell. Analysts think the company earned 21 cents per share in the first quarter, down from 30 cents per share a year ago.
Discount retailer Dollar Tree (DLTR, Fortune 500) is expected to report first-quarter earnings of 59 cents per share, up 23% from a year ago, when it releases results in the early morning.
Thursday: April durable goods orders, weekly jobless claims and new home sales are all due in the morning. Durable goods are forecast to rise modestly after a dip in March. New home sales are seen rising by 7,000 units. The government's weekly oil inventory report, which is normally released Wednesday at 10:30 a.m. ET, will be out at 11 a.m. ET.
After the closing bell, personal computer maker Dell (DELL, Fortune 500) is expected report first-quarter earnings of 23 cents per share, down from 38 cents a year ago.
Friday: Gross domestic product, the broadest measure of economic activity, likely shrank at a 5.5% annual rate in the first quarter, according to estimates for the government's preliminary GDP report. That's an improvement from 6.1% drop the government reported in April. The report is set to be released at 8:30 a.m. ET.
Other economic reports include the Chicago purchasing managers index and a revision of the University of Michigan's measure of consumer sentiment. 
