"Part of me says the optimism has to build again, before we correct. It (S&P 500) could break through 2,200, and we'll get all excited, and then we get hit," Paulsen said. "In the stock market, there's some degree of complacency but there's not really optimism."
The Dow and S&P 500 ended the week with gains on the back of Friday's strong rally, despite several selling waves. The Dow rose 1.5 percent to 18,191, not far from its all-time high. The S&P was up about 1.4 percent at 2,116, which was near its all-time high. Financial stocks were the best performers, up 1.6 percent for the week. Energy and telecommunications were the worst, down 1.2 percent and 1.4 percent, respectively.
"The bias is certainly to the upside for stock prices through the summer," said Dan Greenhaus, chief global strategist at BTIG. "The economy is bouncing back, earnings were better than anticipated, interest rates are low." While the market does not expect a June hike, Greenhaus said market expectations for a rate rise in September have fallen to about 20 percent and less than 50 percent for a December hike, after the jobs report.
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Strategists say it's the data that could dominate in the week ahead. April retail sales are scheduled to be reported Wednesday, and there's also PPI inflation data Thursday, and industrial production and consumer sentiment Friday.
Economists in the past week chopped their expectations for the first quarter, and now see a contraction of about a half percent in GDP when the second reading is released. So any data that can illuminate how the second quarter is doing will be important. Expectations have also come down for the second quarter, which is now seen growing at just about 2.5 percent.
"The onus is on the economic data to prove that the first quarter (weakness) was transitory," said John Canally, economist and market strategist at LPL Financial. "I think the markets have given the economic data a free pass, but now the free pass ends and it's up to the data to put up or shut up."
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But if that data get too strong and pushes Treasury yields higher, that could start to spook stocks. Markets will also be keeping an eye on Europe after rising German bund yields in the past week helped drive long-end Treasury yields uncomfortably higher for stock investors. The 10-year yield was close to 2.25 percent Wednesday, but dropped to the 2.11 percent area after the employment report Friday before ending the week at 2.14 percent.
In the week ahead, retail sales are the data that matters most to markets. "I think that's a key report," said Moody's Analytics' chief economist, Mark Zandi. "We've been looking for the benefit of lower oil prices to flow through to spending and so far it's been very modest. Last month, retail sales were OK, certainly better than January and February. But we need to see stronger core, beyond autos and gasoline. It should be 0.4 to 0.5 percent plus to suggest consumers are going out and spending more."
Zandi expects headline sales to be flat, but up 0.5 percent when eliminating gasoline and auto sales.
Besides the data, there are still a few earnings including Cisco, and retailers Macy's, Nordstrom and Kohl's in the week ahead.
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Earnings had been a big concern for the market, but growth has been better than expected and a robust 67 percent of S&P 500 companies have beaten expectations. According to Thomson Reuters, earnings are now up 2.2 percent for the first quarter for the S&P 500 with about 90 percent of companies reporting. That compares to expectations for a 3 percent decline for the quarter before the earnings season started.
Jonathan Golub, chief U.S. market strategist at RBC, pointed out that companies in the S&P 500 beat estimates by more than 7 percent. "This is entirely out of sync with a maturing economic cycle," he wrote in a note. Revenues overall fell 3 percent, but without energy, there was a 2 percent gain.
He also noted that domestically oriented stocks (benefiting from a weak dollar) saw earnings rise 9.8 percent, a trend Golub says has been ongoing for 12 quarters and is expected to continue.