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) -- From the glass half full department, at least there's only one trading day left in May ... how much worse can it get?

After Wednesday's


, all three major U.S. equity indices are down at least 6% this month with the

Dow Jones Industrial Average

logging just five positive sessions along the way.

What's become clear is that fundamentals are out of the window until Europe either adequately addresses its deteriorating debt situation or the eurozone starts to crumble with either Greece or Spain making an exit stage bereft.

The lack of a concrete plan at this stage of the crisis across the pond seems to be what's most galling to investors right now. None of the accords struck ever seem to stick. One day the headline is Greece agreeing to austerity measures to get more bailout money. Weeks later, the whole deal is thrown into doubt by political upheaval.

Spain announces a plan to prop up


through a backdoor refinancing the European Central Bank, but it turns out the ECB may or may not be on board. The European Union proposes a unified banking system for the eurozone, and it's met with a shrug because there's very little confidence left that any grand solutions will actually come to pass.

The only thing that's provided any relief is the long-term refinancing operation and that's because it involved ... you guessed it ... more debt!

The fear was palpable on Wednesday as rabid demand for the 10-year Treasury drove the yield down to record lows, and the euro again weakened against the dollar, showing the safe-haven U.S.A. theory is alive and well.

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That doesn't help stocks though and retail investors continued to abandon ship in droves last week. According to data from the

Investment Company Institute

, long-term mutual funds investing in domestic equities saw outflows of $7.2 billion for the week ended May 23, the largest amount all month.

A good bit of that money looks to have come out of funds entirely as total asset flows were negative for the first time in five weeks, losing a total of $4.9 billion. Bond funds took in a total of $2.8 billion for the week, while hybrid (investing in bonds and equities) funds saw outflows of $695 million.

Sam Stovall, chief equity strategist at

S&P Capital IQ

, says a key level to watch for the S&P 500 is 1292, the index's May 18 intraday low, saying a close below there would open the gates for a further decline. He also bravely attempted to describe how touch-and-go sentiment is these days.

"A bounce, however, would imply to us that the market believes the Europeanswill finally succeed in buying more time for Greece and Spain, despite proposals that currently change from day to day," he wrote. "Also, the markets appear to be accepting of the consensus forecast of 8% growth in 2012 Chinese GDP, in our view. We think the risk is therefore to the downside, should China's landing disappoint. As a result, the news-driven nature of this gyrating global equity market may only be one or two headlines away from renewed risk-on or increased risk-off."

As things stand now, the action in stocks this month is already beyond ugly, and a disappointment in Friday's May jobs report would be devastating with sentiment already so poor and the fears about the

"fiscal cliff"

starting to gain some traction.

As for Thursday's scheduled news, the retailers will be reporting same-store sales for May. Expectations are pretty low with

Thomson Reuters

predicting an increase of just 2.4%. Jefferies previewed the reports earlier this week, saying it anticipates mostly in-line results.

"We expect good results but for most retailers to be in line as Street expectations adequately reflect this," the firm said. "In May, weather warmed some from April which helped drive traffic and we think likely drove improved conversion as well. Also, Mother's Day was later in the month vs. last year which could have had some positive impact with the week leading up to the holiday showing good traffic gains. Lastly, the group overall is benefiting from favorable fashion including color and bottoms trends."


(GPS) - Get Gap, Inc. Report

is Jefferies' top pick in the sector, and the firm is expecting a solid beat, in part because of very easy comparisons with last year.

"At Gap brand, we expect improved full price selling due to cleaner inventories and improved fashion as the company capitalizes on the big colored bottoms trend right now and overall improved styles," Jefferies said. "Further we expect better results from Old Navy partially due to a much easier compare but also from a refined assortment and successful marketing campaign which should boost traffic. We continue to see management's calendar '12 EPS range ($1.78-$1.83) as very conservative and believe Street numbers are too low."

Gap shares closed Wednesday down nearly 4% at $26.67, but the stock is still up almost 50% year-to-date.

Deutsche Bank is looking for above-consensus performances from

TJX Cos.

(TJX) - Get TJX Companies Inc Report


Ross Stores

(ROST) - Get Ross Stores, Inc. Report

, and it sees the potential for overall same-store sales to surprise to the upside.

"As to what helped May comps, we'd highlight continued improvement in jobs and personal income, and a sense from several retailers/brands that the industry may be getting moderately more promotional into the summer," wrote the firm, whose top pick in the group over the next 18 months is

Urban Outfitters

(URBN) - Get Urban Outfitters, Inc. Report




(CIEN) - Get Ciena Corporation Report

is the big earnings report on Thursday. The Linthicum, Md.-based networking equipment company is slated to deliver its fiscal second-quarter results before the opening bell, and the average estimate of analysts polled by

Thomson Reuters

is for a loss of 3 cents a share in the April-ended period on revenue of $447 million.

The stock is down 2% since the start of 2012, and more than 50% in the past year, but the sell side is pretty bullish with 19 of the 24 analysts covering Ciena at either strong buy (8) or buy (11) and the 12-month median price target sitting at $18, implying potential upside of 51% from Wednesday's closing price of $11.88.

Deutsche Bank has a buy rating and a $16 price target, and it's looking for a beat on the top line with revenue of $450 million. It likes the valuation right now (shares trade at a forward price-to-earnings multiple of 13.5X) but still sees some potential holes in the bull case.

"We see the stock working from current levels, prefaced with our caution on revenue recognition (i.e. acceptance timing, etc.) and a stretched-out product cycle ramp due to near-term macro and platform deployment issues," the firm said on Tuesday. "Our latest research suggests that Ciena remains solidly positioned in the large telco and ISP upgrades of 40/100G metro and long-haul transport, OTN switching, and Carrier Ethernet. Double-digit growth trends in 4G LTE, IP video, and Cloud services are among the key demand drivers for Ciena's next-generation optical solutions (we estimate a +$1B order pipeline) - summing the basis for our positive outlook."

Other companies slated to report include

Isle of Capri Casinos



Joy Global



Movado Group

(MOV) - Get Movado Group, Inc. Report


OmniVision Technologies



Saba Software


, and

Vera Bradley

(VRA) - Get Vera Bradley, Inc. Report


The economic calendar is packed. Ahead of Friday's key May jobs report, Wall Street gets both the Challenger layoffs data for May at 7:30 a.m. ET and the Automated Data Processing employment change report for the month at 8:15 a.m. ET along with the usual weekly jobless claims numbers at 8:30 a.m. ET.

According to

, the consensus is calling for ADP to show an increase of 157,000 jobs, and for initial claims to come in at 368,000.

Ian Shepherdson, chief U.S. economist at

High Frequency Economics

, is expecting a blowout ADP number with payrolls rebounding to 225,000, and he thinks the action in bonds will get interesting if that comes to pass.

"The Treasury market is starting to resemble a train which has leaped the tracks and is now heading full speed for a destination not shown on the timetable," he wrote. "We just don't know how far yields can fall because no one can be sure which of the innumerable possible -- but all bad -- outcomes in Europe will come to pass."

Shepherdson continued: "Just as important, perhaps, the markets have not yet had to deal with the combination of grim news from Europe and good news from the U.S. The past two months' employment numbers have made it safer to be long Treasuries, but we are far from convinced that position is sustainable. The fox could be let loose in the chicken coop as soon as today, if the May ADP private employment report -- delayed by the Memorial Day holiday weekend -- is as strong as we expect."

Also due before the bell is the second estimate of first-quarter gross domestic product at 8:30 a.m. ET with economists estimating growth will be pegged at 2%, down from the 2.2% advance estimate and growth of 3% in the fourth quarter.

The Chicago purchasing managers index arrives at 9:45 a.m. ET and weekly crude inventories are also due 11 a.m. ET. The consensus is for Chicago PMI to come in at 57 for May, up slightly from 56.2 in April; although's

own estimate is for a decline to 55.


Written by Michael Baron in New York.

>To contact the writer of this article, click here:

Michael Baron


Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.