Investors cheer jobs. But what now?

NEW YORK (CNNMoney) -- The March jobs report is proof positive that the economic recovery in the United States is picking up steam.

There's little to quibble about, save for stagnant wages. Decent job growth across several sectors and a lower unemployment rate is encouraging.

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Stocks rose modestly Friday as well, a reflection that investors realize a healthier economy is good for Wall Street and Main Street.

But has the market already factored in an economic rebound? With stocks way above their bear market lows -- not to mention up another 6% or so in 2011 despite all the global turmoil -- that's now the key question.

On the one hand, you really have to be a perma-bear, one of those people who sees one cloud in the sky and starts building an ark, to think that stocks are due for a major collapse.

Major companies will soon be releasing their results for the first quarter. Earnings growth and sales growth is expected to be fairly strong. There has also been an explosion in merger activity this year.

The fact that investors have largely shrugged off the turmoil in North Africa and the Middle East as well as worries about Japan also suggests that investor sentiment is far more glass half-full than half-empty.

Still, investors can't ignore some of the risks out there. I met with Joe Darcy, manager of the The Hartford Municipal Real Return Fund (HTNAX), a few weeks ago. And he joked that when looking at the markets sometimes it's not a matter of the glass being half empty or full. It's about when the glass is going to spill.

Even though the U.S. economy and outlook for corporate profits in the first quarter are promising, the global economy still could trip things up.

Frances Hudson, investment director of strategy for Standard Life Investments in Edinburgh, Scotland, said it would be a mistake to gloss over the many problems still facing Europe.

Portugal, Ireland and other of the so-called PIIGS nations of Europe have significant problems with debt and their financial systems. That's not going away anytime soon. But at the same time, inflation is picking up in other parts of Europe, particularly Germany.

That could lead the European Central Bank to soon raise interest rates, perhaps as early as its next meeting on April 7. The ECB has only one mandate: managing inflation. ECB president Jean-Claude Trichet has been increasingly vocal about his worries regarding rising prices.

But Hudson said that if the ECB does act next week, it could make problems on Europe's periphery even worse.

"There is the potential for monetary policy error if the ECB jumps in too early and raises rates," she said.

There's a flip side of the inflation coin though. The Federal Reserve is likely to keep interest rates low for a while, despite more hawkish comments from some members in recent weeks.

And Hudson said that just as raising rates too soon is a mistake, so is "throwing liquidity at any problem as a knee-jerk response."

Even if the Fed lets its controversial bond buying program (QE2) expire in June as planned, some worry that the central bank will need to do more to fight inflation.

"Interest rates are too low. The Fed has to start raising them sometime early next year," said Ted Cronin, CEO of Manchester Capital Management, a wealth management firm in Manchester, Vt.

Cronin said he's not overly worried about inflation just yet but said he's likely to start restructuring portfolios over the summer to get ahead of the threat.

He predicts that the yield on the benchmark 10-year Treasury note, currently hovering around 3.5%, could rise as high as 7% to 8% over the next three to five years. Cronin said that stocks in high-growth sectors like technology are a good way to hedge against inflation.

Again, I can't stress enough that I'm not suggesting the market is going to plummet like it did in 2008 and early 2009. Cronin said he's bullish on stocks despite inflation concerns. And he's not expecting a double-dip recession.

But it may not be a big shock if stocks soon hit a wall and flat-line for a bit.

JJ Kinahan, chief derivatives strategist with TD Ameritrade in Chicago, said that the combination of high oil prices, a still weak housing market in the U.S. and the European banking problems could eventually cause investors to take a break from buying.

"No matter what news comes out, the market is viewing it as positive. But with that said, we may soon stall instead of continuing to go higher and higher. There are too many clouds," Kinahan said.

Reader comment of the week and get out the Doc Martens! I wrote about the many challenges facing electronics retailer Best Buy on Monday. One reader (using our soon to be defunct Facebook Connect feature) said the Minneapolis-based chain is in even bigger trouble than investors think.

"Best Buy has "fooled" almost all of its customers at least once. $20 for a USB cable?" wrote Steve Gemignani ."If I can buy it at home (Amazon, Newegg) or at someplace I'm going for groceries (Wal-Mart, Super Target) - usually for less - what's the point of going to Best Buy and getting fooled again?"

Speaking of Minnesota (as CNNMoney video anchor Poppy Harlow and Land of 10,000 Lakes native is wont to do) comments from Minneapolis Federal Reserve President Narayana Kocherlakota in the WSJ about the Fed possibly raising rates later this year created a stir Thursday.

They also made me immediately think of a geographically relevant song lyric. So I naturally challenged my Twitter followers to identify it. "I'm looking California. And feeling Minnesota."

The song is "Outshined," a classic bit of Seattle 90's grunge from Soundgarden. The winner, amusingly enough, is my BullHorn video guest today: Congrats to Josh Brown, aka @reformedbroker. You truly are a renaissance man!

-- The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.