Stocks could feel a few more jolts in the coming week, as earnings season trumps just about everything else and some high profile names have already disappointed.
IBM, Procter and Gamble, McDonald's and Johnson & Johnson are among the blue chips reporting as dozens of S&P 500 companies unveil earnings reports in the four trading days following Monday's Martin Luther King holiday.
Existing home sales will be the important economic report for the week, and it is reported Thursday, along with weekly jobless claims and leading indicators.
Stocks have been tossed about in the past week, with the Dow ending the week basically flat, up 0.1 percent at 16,458 after two big three-digit moves. The S&P 500 was off about 0.2 percent at 1,838, and the Nasdaq gained 0.5 percent to 4,197.
"It's mostly a correction," UBS equity and derivatives strategist Julian Emanuel said of the rocky activity. "This is a healthy kind of correction as opposed to a real correction, with a 6, 7, 8 percent pullback."
The correction has been rippling through sectors and stocks, he said, rather than hitting the indexes hard. For instance, consumer discretionary had its worst week since August, down 1.9 percent and now off more than 2.5 percent since the year began. In the past 12 months, it's been one of the best performers—still up 30 percent.
"You're seeing the 2013 leaders lag and consumer discretionary is the prime example," Emanuel said.
With Fed officials quiet ahead of their Jan. 28 and 29 meeting, and little economic data, the earnings news will be the likely catalyst for the coming week.
"It's really going to be a stock-by-stock story that's going to be dominated by the forward-looking story that individual managements are going to be telling, rather than the broad brush generalizations we may be making," Emanuel said.
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Earnings are expected to grow about 7 percent in the fourth quarter, and about half of the 50-odd S&P names that have already reported beat expectations, compared with 37 percent that missed, according to Thomson Reuters. The beat ratio is fairly low though it is early in the earnings season.
The past week had its wobbles. Royal Dutch Shell issued a rare profit warning Friday, saying its earnings were hurt by lower oil and gas volumes, higher costs and weak refining performance. UPS also warned about lower profits, saying that last-minute holiday shopping made it unable to complete deliveries in time. Intel provided a downbeat outlook, and GE disappointed on the bottom line.
Emanuel said the tone of the market has changed so that individual stocks will trade more independently from their sectors and the market as a whole. The top 50 stocks in the S&P 500 have become less correlated to one another than at anytime since before the recession, he added.
Also of interest is the type of hedging he has been seeing in the options market around earnings.
"In the options market, on the individual name level, the implied earnings move … the expectation of the move the day after the earnings release is about as low across the board as it's been in about a couple of years," Emanuel said.
"That's not confined to any one sector or any specific thing," he added. "That just builds on the fact that implied volatility is pretty low in general and the whole idea of rotation. People are confused so you're having this correction that's coming more as a matter of confusion rather than a market selloff."
Some of what is confusing investors is the state of the economy and whether the weak December jobs report indicated something worse or was a once-off phenomena, Emanuel said. The Fed's tapering of its quantitative easing is a concern, as is the uncertainty that comes with change at the top when Janet Yellen takes over for Fed Chairman Ben Bernanke at the end of the month.
Gina Martin Adams, institutional equity strategist at Wells Fargo Securities, said the Fed-related risk to stocks would be if interest rates were to rise too quickly. Rates have moved higher but have been holding below 3 percent since the Fed announced in December that it would taper.
The 10-year Treasury note finished the week with a yield of 2.82 percent.
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"We've positioned staples, utilities and telecom as underweight," Adams said. "I think it will be tough for those sectors to outperform" in a higher rate environment.
She also expects the market to pay close attention to earnings this week.
"The trouble is balancing what could be a relatively dicey fourth quarter with ... some commentary that supports a better future," Adams said.
Besides earnings, traders will be watching headlines from the World Economic Forum in Davos, Switzerland, as world leaders and business leaders gather starting Tuesday.
"That probably will provide some positive sentiment on the economic outlook," Adams said. "Based on what Davos looked like last year, it will be a cheerleading event for economic growth."
It used to be more gloomy, she added, but the market could be heartened with positive comments about the economy at a time when the growth outlook is unclear.
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China too has been a point of concern in the global economy, and it will be in the news in the coming week, when it releases important economic data on GDP, retail sales and industrial production Monday.
"If it does come in weak, it's going to support this whole thesis that China's just hobbling along right now, and it will put more pressure on the Australia dollar," said Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management. Weak data would push the Australian dollar to fresh multiyear lows, he added.
The U.S. dollar is in a holding pattern, according to Schlossberg.
"The dollar is in a bit of a funk," he said. "It's caught in range trading right now because the market is very unclear on the true direction of the U.S. economy."
Fourth-quarter GDP is now tracking at about 3.5 percent after third-quarter growth of 4.1 percent. But it's unclear whether the momentum has carried into the first quarter, and there is little data in the coming week.
Martin Luther King Day
Earnings: United Tech, Norfolk Southern, eBay, Netflix, F5Networks, Motorola Solutions, Abbott Labs, US Bancorp, St. Jude Medical, Noble, Northern Trust, Parker Hannifin, Raymond James, Ethan Allen, Teradyne, WesternDigital, Crown Castle
7:00 a.m.: Mortgage applications
Earnings: Microsoft, Samsung, Starbucks, McDonald's, Fifth Third, Lockheed Martin, Nokia, Southwest Air, Johnson Controls, Celanese, Altera, Juniper Networks, KLA-Tencor, Synaptics, ETrade, Federated Investors, Intuitive Surgical, KeyCorp, AmerisourceBergen, Baxter, Union Pacific
8:30 a.m.: Initial claims
8:58 a.m.: Manufacturing PMI
9:00 a.m.: FHFA HPI
10:00 a.m.: Existing home sales
10:00 a.m.: Leading indicators
—By CNBC's Patti Domm. Follow here on Twitter