The volatility that zapped stock prices in the past week could continue to deliver some jolts in the week ahead.

Oliver Quilla for CNBC.com

U.S. markets will keep their focus on Europe, where EU officials on Saturday were working out the details of a financial support mechanism to prevent Greece's debt turmoil spreading to Portugal and Spain. It's hoped that the plan will be ready for approval by EU finance ministers on Sunday.

"The situation is clearly reaching crisis levels, and you don't need to be a genius to figure it out. I think that's what we're going to need to see them stabilize the financing market," said Barry Knapp of Barclays, before the Euro zone news.

Euro zone leaders approved an anticipated package of emergency loans for Greece late Friday.

Stocks had their worst week since just before the start of the market's 14-month rally in March of 2009. The Dow was down 4.7 percent at 10,380, and the S&P 500 fell 6.4 percent to 1110, sending the index slightly into negative territory for the year. The Nasdaq was nearly 8 percent lower at 2265. Energy stocks were the worst performers, down 7.9 percent, as crude oil declined 12.8 percent for the week to $75.11 per barrel. Gold, however, rose 10.4 percent to $1,210.40, in a flight-to-safety trade.

The worries about Greece and further contagion took a toll on the euro. The dollar gained nearly 5 percent in the past week against the euro, which was trading at $1.2731 Friday. The dollar, meanwhile, was down 2.8 percent against the yen but up 3.2 percent against the pound, as uncertainty about the U.K. election weighed on sterling.

"All I can say is if we can assume the European Central Bank does the rational thing, which is ease aggressively, it should be good for stocks. Ultimately, I think the market is going to continue to sell off until you have more clarity about what the European Central Bank is going to do," said Jason Trennert, chief investment strategist at Strategas Research.

French President Nicolas Sarkozy and German Chancellor Angela Merkel Friday evening (New York time) said the 16 euro zone nations would have a financial defense plan by the time markets open Monday to protect their currency. European finance ministers will hold another emergency meeting Sunday to work out specifics.

Merkel, meanwhile, faces political risk this weekend as voters in the region of Northern Rhine-Westphalia go to the polls Sunday. It is possible she could lose her majority as a result. Germany's parliament approved the Greek aid package Friday, despite its unpopularity with German citizens.

Traders Friday speculated that the Fed could make a weekend announcement as well, about extending swap lines to Europe.

The market's worst day in the past week was Thursday when the Dow took a near 1,000 point intraday plunge amid a still-unexplained series of trades in stocks and futures. The incident resulted in a batch of canceled trades on Nasdaq and electronic exchanges. The SEC and CFTC said late Friday they are throwing lots of resources behind investigating the situation and will make rule changes as necessary to prevent it from happening again.

What to Watch

In the coming week, there are some major earnings reports expected, including Disney

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[DIS  Loading...      ()   ], Cisco

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[CSCO  Loading...      ()   ] and retailers Macy's

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[M  Loading...      ()   ] and JCPenney

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[JCP  Loading...      ()   ]. Economic reports include retail sales and trade data. The Senate will also continue to work towards a financial regulatory reform bill.

"Events around Europe are first and foremost, followed by Treasury supply which has to be taken down in a volatile week, and retail sales," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank.

The European sovereign debt crisis comes as U.S. economic and earnings news is increasingly positive and would have been a potential spring board for stocks. Friday's April employment report of 290,000 new non farm jobs was much better than the 180,000 anticipated by economists.

LaVorgna said he expects April retail sales to gain 0.2 percent, softer than last month when an early Easter and pent up demand sent consumers shopping. "Even a mild gain in April retail sales will show how the consumer is recovering and is healthier than we gave him or her credit for," said LaVorgna. As for jobs data, he said he is already penciling in a 475,000 non farm payroll gain for May, which would include 250,000 census jobs.

The week's economic reports include wholesale trade on Tuesday; international trade on Wednesday; weekly jobless claims and import prices on Thursday. Besides retail sales Friday, there is industrial production, consumer sentiment and business inventories.

"I'm kind of betting the U.S. economy will power through this," said Trennert. "I think (stock) valuations are such now that I think the risk reward is quite positive."

"The question among everybody here is, "Is Greece Bear Stearns or is it Dubai? Is it systemic or is it a kind of one off thing." My own visceral feeling is it's more of a one off type thing. I do think it's clear the U.S. stock market was due for some sort of consolidation, but I'm not convinced Greece was enough to short circuit what should be a pretty robust rebound into 2011," Trennert said.

Knapp said, as he watched Friday's 139 point Dow sell off, that it was interesting that the sectors leading the market lower were tech and industrials. "The two worst performing are tech and industrials. Financials are actually doing better. That makes no sense to me. What it implies is that's the stuff people are long and they're selling because they have to rather than they want to. It means we're closer to a low than a top," he said.

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