One concern dogging the market is that China will overreach in efforts to slow its growth and snuff the global recovery. On Friday, China moved to tighten bank reserves to cool inflation, sending many commodities lower. Gold fell nearly 2 percent Friday, and was down just over a half percent for the week at $1360.40 per troy ounce.
Other commodities were also volatile. Oil rose nearly 4 percent, with crude ending the week at $91.54. Agricultural commodities also were big gainers, after a USDA crop report showed less supply than expected. Corn jumped 9 percent on the week, and soy beans were up 4.2 percent.
Jordan Kotick, global head of technical strategy at Barclays Capital, said the volatility across markets is not unusual early in the year. "In the month of January, almost every asset class has a tendency to test both sides of the market," he said.
"Usually in the middle of the first quarter is when volume comes back" and "smart money" allocates capital, he said. He said he still likes stocks though emerging markets equities are a bit overdone, and he expects more money to roll into energy.
"We like everything in energy except for natural gas," he said. Energy stocks were the best performing of the major S&P sectors for the past week, gaining 3.3 percent.
Trade, North Korea, climate change and, of course, the Chinese currency are all topics expected to be discussed during the Washington summit Wednesday.
As U.S. officials continue to criticize China for constraining appreciation of its currency, the yuan is trading at its recent high and is up about 1 percent since the start of the year, according to Brian Dolan of Forex.com.
"Usually, they let the yuan appreciate a little bit ahead of their meetings, and it would be normal that usually after, they'll keep it subdued. There's still in a situation where they're trying to restrain inflation, and that is a good argument for them to allow their currency to strengthen further," Dolan said. U.S. officials complain that China gets an unfair trade advantage by keeping its currency cheap.
While not so much a market event, Dolan expects investors to keep a close eye on the summit. "In terms of symbolism and the presence of China on the world stage, in that regard, this is going to be a high diplomatic drama," he said.
In terms of the currency market, the action could remain in the euro. European finance ministers are not expected to take action on the bailout fund at their meetings this week.
"It'll be important for them to show some further momentum in terms of coming up with a longer term solution. Germany is still opposed to any common euro bonds so that makes the only solution they're likely to come up with is an enlargement of the stability fund. That is going to have to be quite sizeable. That sets up the possibility for Germany to foot the largest part of that bill, and that is politically unpalatable in Germany," he said.
Dolan said it's possible for the euro to drive higher toward $1.36, but ultimately the dollar will regain some strength against the currency. "The dollar is going sideways, but I think we're going through a little bit of a pause right now. I think the trend is overall for a stronger dollar," he said.
There are just a few items on the economic calendar in the week ahead. The highlights include housing data. The National Association of Home Builders survey is reported Tuesday, housing starts are Wednesday and existing home sales for December are Thursday.