The outlook for investors could brighten considerably in the coming week if the market continues to tune out the din of war in the Middle East and concentrates on the sounds of silence at home.

About two weeks before the end of the first quarter, both the quantity and quality of corporate earnings forecasts have been unusually favorable, with most of the highest-profile preannouncements consisting of guidance to the upside. While the absence of bad news never hits as hard as a terrorist's bomb, its obverse -- a plethora of warnings -- could have certainly exacerbated the pain in the week just ended, in which the Dow finished down 0.5% and the Nasdaq lost 2.2%.

To date, there have been 1.7 earnings warnings to every positive preannouncement, according to First Call -- well off the historical average of 2.5. What's more, profit estimates have been rising over the past couple of months, and analysts are now calling for 15.9% growth in the first quarter, up from 13.4% at the start of the year.

Several sectors are looking at another blowout quarter for earnings. Basic materials are expected to increase profits 77%, while tech firms are projected to post earnings growth of 52%. Profits in the transports group are seen rising 48%. Telecom and utilities will post declines.

This season has produced a conspicuous absence of warnings dire enough to flatten the broader market or even significant parts of major sectors. Last week's biggest preannouncement came from 3M ( MMM), which said strength in its graphics and industrial segments would combine with a weaker dollar to propel earnings a few pennies above per-share estimates.

The announcement resembled one a week earlier from Procter & Gamble ( PG) and was consistent with bullish outlooks proffered by executives at Cisco Systems ( CSCO), Ingersoll-Rand ( IR), EMC ( EMC) and Illinois Tool ( ITW).

If earnings remain in check, investors are left with war and the economy to choose from. Up until now the latter has proven more persuasive -- and more bullish.

"The big driver this week will be a shift to macro, not micro, which is typical between earnings reporting seasons," said Art Hogan, chief market analyst at Jefferies & Co. "Economic data and the ongoing headlines about al Qaeda will be the drivers."

The No. 1 economic release will be the University of Michigan's revised reading of consumer sentiment on Friday, Morgan said. The reading "is a huge number for the market and a huge number for the Fed," he said. Analysts have forecast a reading of 94 from the preliminary reading of 94.1, vs. a reading of 77.6 in March of 2003.

The Fed, said Morgan, is focusing on the Michigan sentiment figure, retail sales numbers and new jobs and nonfarm payroll data "as a preliminary reading of the strength of consumers." He thinks the Fed is planning monetary policy on the basis of those numbers.

"How can we get more fuel in the fire for this so-called economic recovery we're in if we don't have those main ingredients?" asked Morgan.

While the Michigan sentiment reading has improved since combat in Iraq ended, it has pulled back in the last couple of months, Morgan said, citing talk of jobs-outsourcing overseas and the lack of job growth. Some anecdotal evidence, including the Manpower survey last week, are fueling hopes the number will surprise. Economists expect Thursday's Help Wanted Index for February to show a reading of 39, up slightly from the prior month's reading of 38.

Investors and traders also will be looking to Thursday's initial jobless claims data for the week ended March 19 as well. Hogan said he expects the Labor Department to record about 340,000 initial claims, up slightly from the prior week but in line with a general downward trend.

New-home sales and existing-home sales for February will be released on Wednesday and Thursday, respectively. Economists have projected that new-home sales will come in at a seasonally adjusted annual rate of 1.1 million, from 1.106 million in the prior year, while existing-home sales are seen up at 6.2 million, from 6.04 million in January.

With new-home sales expected to decline marginally and existing-home sales expected to rise slightly, "It looks like we're on track for a banner year in housing sector," said Charles Rotblut, director of financial content at INVESTools.

Meanwhile, Wednesday's release of durable goods orders for February could be looked at as a proxy for the economy's major sore spot -- the manufacturing sector, said Rotblut. "We already had the Philly Fed and the ISM Index suggesting a slowing," he said.

Along with consumer sentiment, personal income and spending for February are on the schedule for Friday. Economists forecast personal income to rise 0.3% in February, compared with an increase of 0.2% in January; personal spending is seen up 0.5%, from a 0.4% rise in the prior month.

Analysts don't see much impact form the final reading of fourth-quarter gross domestic product on Thursday, which is expected to remain unchanged at up 4.1%.

In corporate news, PeopleSoft's ( PSFT) annual meeting for stockholders on Thursday could move the market, as investors will be looking for the company to comment on rival Oracle's ( ORCL) recent hostile takeover bid, Morgan noted.

A few consumer-based companies are reporting earnings next week: Walgreen ( WAG) on Monday, Family Dollar Stores ( FDO) on Tuesday, and ConAgra ( CAG) on Thursday.

In addition, look for Goldman Sachs ( GS) on Tuesday and EchoStar ( DISH) on Friday.