While last week's impressive rally in the stock market isn't likely to be repeated in the week ahead, some analysts are hopeful that the gains can continue at a more moderate pace.

But any further advance will depend on the direction of oil prices, the dollar, a couple of bellwether earnings reports and, of course, a

Federal Reserve

monetary policy meeting.

Stocks moved higher last week as it became clear that President Bush would be re-elected for a second term and as oil prices continued their descent. A better-than-expected employment report on Friday added to the enthusiasm, pushing the

Dow

up 3.6% for the week to 10,386. The

Nasdaq

climbed 3.2% to 2039.

"We think there's a pretty positive tone, and we wouldn't be surprised to see some of the momentum we've seen this week continue," said John Waterman, managing director of investments at Rittenhouse Financial.

Waterman said the financial markets are in a better position now that the uncertainty of the election is out of the way. But for stocks to make more headway, he said, investors need to be convinced that oil prices have peaked and that the Fed is going to take a break from raising rates in the near future.

"I think, increasingly, people are starting to believe that given that GDP growth has moderated and inflation doesn't seem to be an issue, the Fed should raise rates now and then go on hold," he said.

The central bank is widely expected to hike rates by 25 basis points on Wednesday, but investors will be listening for any clues in the Fed's statement regarding a fifth move in December.

"They're definitely going to raise rates, especially with the jobs data that came out," said Art Hogan, chief market analyst at Jefferies & Co.

Nonfarm payrolls increased by 337,000 in October. Still, economists attributed some of that growth to cleanup and reconstruction efforts following four hurricanes and to an increase in temporary and government jobs. Excluding temporary help, private-sector employment has averaged just 145,000 over the past three months.

"We'll be watching the

Fed's statement much more closely than we have over the last three meetings, because we just don't know what will happen in December," Hogan said.

While the economic calendar is light next week, retail sales on Friday could shed some light on the future course of monetary policy. Economists are looking for sales to climb 0.1%, or 0.6% excluding autos.

The University of Michigan's consumer sentiment survey for early October will also be closely watched on Friday. Other reports of note include wholesale inventories on Tuesday; the trade balance, Treasury budget and import and export prices on Wednesday; and business inventories on Friday.

Economists generally expect GDP growth to moderate slightly over the next two quarters, as consumer spending slows down from a healthy clip of 4.6% in the third quarter. Despite strong job growth in October, average hourly earnings are barely keeping up with inflation, and personal savings are sitting at historically low levels.

Meanwhile, concerns about soaring deficits are starting to mount.

"Republicans are euphoric about the election outturn -- not only an outright majority in the presidential contest, but also gains in the House and Senate," said Goldman Sachs economist Bill Dudley. "Soon that euphoria will collide with an economy that has become increasingly out of balance."

Most analysts believe President Bush will push to make the 2001 and 2003 tax cuts permanent, adding trillions of dollars of additional debt to the budget deficit. While Republicans do not have a 60-vote majority in the Senate -- the amount necessary to prevent a filibuster -- Bush is expected to succeed with this goal. A plan to partially privatize Social Security could face challenges, however.

Although the booming deficit has been dismissed as inconsequential by some, the action in the currency markets recently suggests that is not the case. The dollar dropped to a record low against the euro on Friday despite a solid employment report. The decline in the greenback could be harder to ignore if it continues at a more rapid pace.

Meanwhile, profit reports from

Cisco

(CSCO) - Get Report

and

Dell Computer

(DELL) - Get Report

next week could provide some direction to the market.

Analysts are looking for Cisco to earn 21 cents a share on Tuesday, and Dell is expected to earn 33 cents a share on Thursday.

D.R. Horton

(DHI) - Get Report

,

Ann Taylor

(ANN)

and

Starbucks

(SBUX) - Get Report

are also among those slated to report quarterly earnings. As always, the focus will be on what these companies have to say about the future.