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NEW YORK The prevailing trend in U.S. stocks could be higher this week if investor anxiety eases over the crisis in Ukraine and signs of weakness in the U.S. economy.
Investors will watch for further signs that poor weather may have played a role in a recent string of tepid economic data and dampening profit outlooks, which would underscore views that setbacks may be temporary.
Federal Reserve Chair Janet Yellen's comments, which raised the possibility last week of an earlier-than-expected increase in interest rates, added another element of interest to the data.
U.S. consumer confidence and sentiment are among the economic indicators due this week, along with new home sales and orders for durable goods.
The market, however, remains vulnerable to any escalation in global tensions over Ukraine, especially since the Standard & Poor's 500 .SPX reached another intraday record high on Friday before ending lower after a bout of profit-taking.
"The trend is favorable unless it's upset by world events, and weakening of the data both here and abroad," said Bucky Hellwig, senior vice president of BB&T Wealth Management in Birmingham, Alabama.
"I would say right now, if you look at the scorecard of economic and global events, it looks a little better than it did a month ago."
Stocks bounced back this week after losing more than 2 percent the previous week as the problems in Ukraine and worries about a slowdown in China curbed investors' appetite for riskier assets.
The S&P 500 ended the past week up 1.4 percent, its best weekly gain since February. For the year, the benchmark index is up about 1 percent.
President Vladimir Putin signed laws completing Russia's annexation of Crimea on Friday as investors took fright at a U.S. decision to slap sanctions on his inner circle of money men and security officials.
NATO's top military commander said on Sunday that Russia had built up a "very sizable" force on its border with Ukraine and Moscow may have a region in another ex-Soviet republic, Moldova, in its sights after annexing Crimea.
The Fed was in focus last week, when the central bank made it clear it would rely on a wide range of measures in deciding when to raise interest rates, dropping the U.S. unemployment rate as its yardstick for gauging the economy's strength.
"You just have so much indecision. Do you feel good about what Janet said? Do you feel bad? Do you feel good about the Ukraine? Do you feel bad?" said Drew Wilson, an analyst at Fenimore Asset Management in Cobleskill, New York.
"It just feels like you have a hard time getting momentum either way."
WALLETS AND WARNINGS
Investors will get some information this week on whether consumers kept a tight grip on their wallets last month. The Commerce Department will release February data on U.S. personal income and consumption on Friday. Economists polled by Reuters have forecast slim gains from the previous month.
A final reading on fourth-quarter Gross Domestic Product will be released on Thursday.
"Hopefully some of the data is beginning to clear itself from some of the weather impacts, and we may get some better readings on how things are going," said Cam Albright, director of asset allocation at Wilmington Trust Investment Advisors.
Negative profit outlooks for the first quarter have been increasing as well, with more companies sounding the alarm about possible problems related to this winter's harsh weather.
Among them was General Mills (GIS.N), which missed sales and profit expectations last week and has warned about the current quarter. Its CEO said "severe winter weather dampened sales performance across the food industry."<ID:ASB08H38>
Thomson Reuters data showed that 108 negative outlooks have been issued by S&P 500 companies so far, compared with only 16 positive ones.
But the ratio of negative outlooks to positive ones remains below that of the fourth quarter, which was the worst since at least the first quarter of 1996, according to Thomson Reuters data.
BANKING ON DIVIDENDS
Among stocks likely to post further gains are financials, which climbed following Yellen's comments last week. She indicated that the first increase in interest rates could come in the first half of next year.
Most analysts in a Reuters poll after the Fed chair's remarks, however, still did not expect the central bank to begin raising rates until the second half of 2015.
Another supportive element for banks came from the Fed after Thursday's close, when the central bank said 29 out of 30 major banks met the minimum capital hurdle in its annual health check.
The S&P financial index .SPSY gained 4.3 percent for the week, its best weekly percentage increase since January of 2013.
In the coming week, the Fed will announce on Wednesday which banks' plans to pay dividends or buy back shares were approved.
"Regulators will sign off on the dividend increases, and if they get approved, that will help the momentum in the financial stocks," Hellwig said.
(Editing by Jan Paschal; For the daily stock market report, please click .N)