With oil prices pushing new record highs, Wall Street analysts said the market may need to see an easing of that pressure for stocks to rise this week.
"The market, as far as stocks are concerned, it's been amazingly resilient in the face of some very bad news, particularly about oil prices," said Michael Metz, chief investment strategist at Oppenheimer & Co., of New York.
Even after oil closed at $66.80 a barrel on the NYMEX on Friday, up $4.49 for the week, the blue-chip Dow Jones Industrial average and broader Standard & Poor's 500 index managed to hold mild gains for the week.
But given that rising crude prices eat into consumer discretionary spending and drive up corporate costs such as energy and chemical raw materials, Mr Metz questioned how much longer investors could shake off the surge in oil prices.
"If we do have oil prices at this level for another week or so, it's going to make investors reconsider the whole outlook for consumer demand, which of course has been the real fuel for the economy," Mr Metz said.
Analysts will also be watching key government reports on inflation - the Consumer Price Index, due out tomorrow and the Producer Price Index, to be released on Wednesday - for any sign of how much longer the Federal Reserve will continue raising interest rates.
The Fed on August 9 raised its benchmark funds rate for the 10th time, to 3.5 per cent. The policy-setting board has been raising rates since June 2004, with an eye toward preventing the economy from overheating and keeping inflation in check.
Labour Department figures are expected to show that, in July, the prices of goods paid for by consumers rose 0.2 per cent, and by businesses 0.1 per cent, factoring out volatile food and energy prices, according to economists polled by Reuters.
"There have not been any big blips in inflation (so far this year)," said Ernie Ankrim, chief investment strategist at the Russell Investment Group in Tacoma, Washington. That has allowed the Fed to stick to its pace of quarter-point rises.
But if either the CPI or PPI figures showed inflation grew at a much faster-than-expected rate, as little as 0.2 per cent or 0.3 per cent ahead of forecast, that could be a sign the Fed would extend or even accelerate its pace of rate increases, which would take a toll on stocks.
Higher rates are typically negative for stock prices since they raise the cost of borrowing for people and companies.
"We're all looking to see when the Fed will stop increasing short-term rates," Mr Ankrim said.
US companies are coming to the end of their flurry of second-quarter earnings reports and have generally topped Wall Street's expectations so far this quarter.
Of the 457 companies in the Standard & Poor's 500 index that have reported results so far, 83.4 per cent met or beat analysts' forecasts, according to Reuters Estimates.
Next week's earnings calendar is weighted toward retailers, who represent nine of the 19 S&P 500 companies due to report. Investors will scrutinise reports from heavyweights such as Wal-Mart Stores Inc. for any warning signs of slowing consumer spending.
While most major retailers have already reported second- quarter sales, their earnings will reveal how heavily they relied on price promotions - which typically sap profit margins - to drive shoppers into their aisles.