What a Week: Uncertainty Rises

But, once again, gloom and doom could turn into bullish revisions, and the market saw seeds of such a rethink this week. Last Friday's strong March jobs report was still fresh in traders' minds as the market saw the consumer may once again be the hero of U.S. growth. Retail sales were a big contributor to fourth quarter GDP, and it may once again rescue estimates this time around.

Same-store sales figures for March were more robust than expected. According to Thomson Financial, 79% of retailers beat analyst expectations. Last quarter, consumers surprised the market by shopping more than anyone expected, which drove up economist GDP estimates to the near 3% level. In the end, the government reported growth in the fourth quarter at 2.5%. The Census Bureau reports on Monday the aggregate retail sales for March.

The trade deficit for February was smaller-than expected, but the boost from exports is fading. Exports fell 2.2% in February, after six months of record highs. Indeed, real net exports are likely to be a 0.5% drag on GDP growth, writes Gary Bigg, economist at Banc of America Securities.

While stocks focused on growth, the bond market continued to shift its attention to the inflation question this week. As the fed funds futures market ratcheted down the odds of a rate cut, yields on longer-maturity bonds are rising. The yield on the 10-year note rose to 4.76% from 4.67% last Friday. The 30-year bond yielded 4.92% Friday, up from 4.87% last week.

Retail stocks didn't fare as well as they might have given the strong sales reports. Companies warned that March's strength might have been due to Easter and Spring break shopping, and Wal-Mart (WMT Quote) warned that its first quarter-earnings guidance may be hard to meet. The S&P Retail Index fell 0.6% on the week.

Cyclical and economically sensitive stocks still drove the market this week, regardless of the uncertainty. The Dow Jones Transportation Average finished up 2.4%, while Morgan Stanley's Cyclical Index gained 0.8%.

The drifting, low volume feel to trading sessions could be partially due to the lack of a major M&A deal. Deal chatter was just that -- chatter. Rumors were squashed about takeovers for Dow Chemical(DOW Quote) and Gold Fields(GFI Quote), but Friday brought a new deal to discuss. On Friday, The New York Times reported that SLM (SLM Quote), or Sallie Mae is in talks with private equity firms. Sallie Mae jumped 14.8% Friday.

Earnings were a positive as economic bellwethers Alcoa(AA Quote) and GE(GE Quote) reported a healthy first quarter.

If investors were just biding time this week, next week will bring more economic data and earnings to chew on. Retail sales come out Monday, along with reports in the week on March housing activity, business inventories, two regional manufacturing reports, and the consumer price index.

1 What would best describe your stance heading into the coming week of trading? Bullish Bearish Neutral 2 Which of these sectors do you think is set to move up in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities 3 Which of these sectors do you think is set to move down in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities View the results without voting

1 What would best describe your stance heading into the coming week of trading? Bullish Bearish Neutral 2 Which of these sectors do you think is set to move up in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities 3 Which of these sectors do you think is set to move down in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities View the results without voting