As third-quarter earnings season gets underway next week, traders are bracing for more volatility in a range-bound market.
"I think we're going to range trade from here until we get (clarity on economic growth)," said Mustafa Sagun, chief investment officer of Principal Global Equities. "Everyone's expecting a fourth-quarter rally, yet if it's not supported by earnings, that year-end rally will come in a very volatile way."
"Guidance will matter more than what the earnings do," he said.
Many analysts say the earnings reports are critical for fourth-quarter gains in stocks and finding clarity on the severity of an economic slowdown, especially amid mixed messages from the Federal Reserve.
Stocks closed higher Friday, with the eking out a gain of 1.46 points to 2,014.89. The index rallied 3.26 percent for the week, its best for 2015.
The major U.S. averages ended a solid week out of correction territory, or within 10 percent of their 52-week highs. The S&P 500 and Dow Jones industrial average topped their 50-day moving averages, while the Nasdaq composite ended just 5 points below.
JPMorgan Chase is scheduled to report after the close Tuesday, beginning a heavy week of earnings reports from financials, which includes Bank of America and Wells Fargo on Wednesday, and Citigroup and Goldman Sachs on Thursday.
Earnings estimates for the sector are down to growth of 3.0 percent versus expectations of 6.1 percent growth two weeks ago, according to S&P Capital IQ.
"Part of that has to do with the Fed (not raising rates)," said Lindsey Bell, senior analyst, global markets intelligence, S&P Capital IQ. "Fixed income and commodities trading is expected to be down for the quarter. You get a pretty good feel for the health of the economy from the banks because they make loans."
To be sure, if earnings continue a recent pattern, results should beat the lowered expectations.
Wall Street will also have plenty of economic data and comments from Federal Reserve policymakers to digest as the timing of a rate hike remains uncertain.
"I think there's still more volatility ahead until the Fed confirms the U.S. economy is on good footing," said Kevin Mahn, chief investment officer of Hennion & Walsh Asset Management.
The Fed's September meeting minutes released this past Thursday indicated policymakers were further from raising rates last month than many thought, as FOMC members were concerned about reaching their inflation target and the impact of a global economic slowdown. Fed speakers have generally maintained the central bank could still raise rates this year.
Chicago Fed President Charles Evans is scheduled to speak again Monday, as is Fed board member Lael Brainard. On Tuesday, St. Louis Fed President James Bullard is due to present remarks, while the New York Fed's William Dudley speaks Thursday.
The Federal Reserve's Beige Book, a report of regional economic activity in the United States, is due for release Wednesday.
Other key data out next week include retail sales and the producer price index Wednesday, and the consumer price index Thursday. Industrial production, the Job Openings and Labor Turnover Survey and consumer sentiment are due Friday.
Joseph Lavorgna, chief U.S. economist at Deutsche Bank Securities, said the economic reports are last key data out before the Fed's meeting at the end of October.
"The economy is still doing OK and interest rates are going to stay low. Equities should do reasonably well," Lavorgna said. "The economy is plodding along. There's not much risk of recession." He expects sub-2 percent GDP growth in the third quarter.
In the last few weeks, soft reads on the U.S. manufacturing sector and a widening of the trade deficit have lowered some expectations for real GDP growth.
"I think what to keep in mind next week is the retail sales," said Ben Garber, economist at Moody's Analytics Capital Markets. "You want to see how strongly the domestic economy is holding up."
"We could see positive support to stocks in the consumer cyclical sectors that are contrast to energy and mining," he said.
The beaten-down energy and materials sectors were the top performers in the last week and will remain a focus in coming days. Crude oil rallied more than 8 percent last week, helping the energy sector gain nearly 7.8 percent for its best week of the year so far.
This was a "particularly good week for emerging markets, commodities and other risk assets," said Eric Stein, co-director of global fixed income at Eaton Vance Management. "Starting a new quarter, there certainly seemed to be a risk-on sentiment. People are still up in the air on what the Fed is going to do. (There's a) bit more stabilization in China."
Mainland Chinese markets closed the shortened trading week higher and will get back into full swing after a weeklong holiday.
In the United States, banks are closed Monday for the Columbus Day holiday. Markets remain open.
Concerns about Congress' ability to smoothly resolve key fiscal negotiations adds to uncertainty for markets. While the deadline for Congress on the budget and debt ceiling talks is still several weeks away, no clear leader for the House of Representatives has emerged since House Majority Leader Kevin McCarthy pulled out of the race for speaker Thursday.
10:30 am: Chicago Fed President Charles Evans speaks
4:30 pm: Fed board member Lael Brainard speaks
8:00 am: St. Louis Fed President James Bullard speaks
7:00 am: Mortgage applications
8:30 am: Produce price index
8:30 am: Retail sales
10:00 am: Business inventories
2:00 pm: Fed's Beige Book
8:30 am: Consumer price index
8:30 am: Jobless claims
8:30 am: Empire State manufacturing survey
10:00 am: Philadelphia Fed business outlook survey
10:30 am: Natural gas inventories
10:30 am: New York Fed President William Dudley speaks
11:00 am: Oil inventories
9:15 am: Industrial production
10:00 am: JOLTS
10:00 am: Consumer sentiment
10:00 am: Atlanta Fed business inflation expectations
1:00 pm: Oil rig count
4:00 pm: Treasury International Capital
Correction: An earlier version of this story misstated when the Treasury's monthly budget statement was due. It is scheduled for release Thursday.