Stocks are due for a breather and will likely trade in a narrow range this week amid a light economic and earnings calendar after a two-month rally that drove the Standard & Poor's 500 to near a nine-month high.
Much of the market's upswing has been driven by investors' hopes for stronger corporate and economic growth later in 2003.
But investors will not receive much guidance about where the economy is headed next week.
Consequently, many believe stock markets are due for a "consolidation" - a pause or decline in Wall Street parlance - as investors lock in profits racked up since mid-March, when the rally started.
"Without any major earnings news and not much economic data next week, I would expect some limited sideways trading," said Joe Kalinowski, director of research at Puglisi & Co., an institutional research and trading firm in New York.
Though most agree the market will rise before the year ends, the absence of a catalyst could lead to a temporary blip in this rally, analysts said.
"We've come really far, really fast. That's our main concern: we're at technically overbought levels," said Tim Ghriskey of Ghriskey Capital Partners, a money manager in Bedford Hills, New York.
"The market looks like it's in the process of consolidating some of those gains, which is healthy," Mr Ghriskey said. "I wouldn't look for a significant fall, but also wouldn't be surprised to see a week of some profit-taking."
Other analysts point to signs in this week's market performance, indicating the rally has run out of steam.
In recent weeks, stocks have risen despite weak economic data and disappointing earnings, said Frank Gretz, market analyst for brokerage Shields & Co. But after solid earnings reports from technology bellwethers Applied Materials Inc. and Dell Computer Corp. last week, shares of both companies fell sharply, suggesting the rally is getting "tired," Mr Gretz said.
When investors sell a stock after positive news, it indicates the market needs a break, Mr Gretz said.
"One of the positive aspects about the market has been its ability to ignore bad news. Before, a company would report lousy earnings, the stock would still rally, and the market didn't care," Mr Gretz said. "Now there seems to be good news, but stocks don't seem to be able to rally."
Blue chips in focus this week include computer maker Hewlett-Packard Co. and retailer Home Depot Inc., both of which report quarterly earnings tomorrow.
Other big chains will also be in the earnings spotlight, including clothing retailer Gap Inc. and Toys R Us Corp., the nation's biggest toy retailer after Wal-Mart, and Home Depot rival Lowe's Companies Inc.
Analysts will pay close attention to any outlook from retailers about consumer spending, which drives two-thirds of the economy. But most do not expect stellar results after Target Corp. and Wal-Mart Stores Inc. reported weak sales last week, citing the Iraq war and poor consumer confidence.
"We could see some more profit-taking as retailers release somewhat tepid results, since the quarter included bad winter weather and the CNN effect," said Mr Ghriskey, referring to consumers who stayed home to watch television coverage of the war in Iraq instead of going out and spending.
Market watchers are not likely to attach much importance to this week's economic numbers.
Going forward, investors will give far more weight to the economic data, which will paint a clearer picture of the economy without war's distortion, said Milton Ezrati, senior economist and strategist at Lord Abbett & Co.
"We're looking for post-war information and have gotten very little of it so far," Mr Ezrati said. "As we move into next week, we're going to start getting more numbers that reflect the postwar environment, which is very important for sustaining this fundamental momentum."