So far, stocks have steered clear of the latest oil slick, but volatile oil prices could still drive markets in the week ahead, as well as a last hoorah for first quarter earnings, and Chinese and U.S. economic data.
But first, the French election on Sunday will set the tone for global markets. Emmanuel Macron is expected to beat Marine Le Pen, the far right candidate, by a fairly wide margin. If that happens, a cloud will be lifted, and it could be a positive for the euro and European stocks, already in a strong rally mode. If there's a surprise, analysts expect a flight to safety and selling in risk assets.
In the U.S., Friday's solid April jobs report and stunning drop in unemployment to 4.4 percent cleared up some concern that the first quarter's economic malaise would linger into the second quarter. The 211,000 new jobs in April offset the meager 79,000 for March, and economists see the labor market continuing to improve.
But economic reports will remain important, with markets setting up for a Fed interest rate hike in June, based on the belief that the first quarter's weak, 0.7 percent growth rate was transitory. Retail sales and CPI inflation data next Friday are the big reports for the U.S., while China trade and foreign exchange reserves are expected before the U.S. opens Monday. Chinese inflation data will come Tuesday. Worries about Chinese growth hit commodities markets hard last week with copper losing nearly 3 percent.
The S&P 500 and Nasdaq closed out a quiet week at record highs, with the S&P 500 up 0.6 percent at 2399, even as crude lost. The Nasdaq gained 0.9 percent to 6,100, and the Dow edged up 0.3 percent to 21,006. Treasury yields rose with the 10-year yield at 2.34 percent late Friday, up from 2.28 percent the week earlier. But some traders had expected bond yields, which move inversely to price, to break out of their recent range on the jobs report.
Treasurys and stocks will be focused on a fresh batch of data in the coming week. The core consumer price index, to be reported Friday, is expected to rise 2 percent year-over-year. This will be important for the Fed, which noted in its statement Wednesday that there was a drop off in inflation in March.