Updated from 6:00 p.m. ESTUpdated to include House passage of health care reform legislation. NEW YORK ( TheStreet) -- Investors may be suffering from health care fatigue, but the short-term direction of the stock market in the coming week was seen hinging on Sunday's vote. The House of Representatives Sunday night passed the landmark, $940 billion health care overhaul. Passage was secured after President Obama and House Democratic leaders worked out a last-minute deal with antiabortion Democrats who had voiced opposition to the bill. The president appeased the group by issuing an executive order offering assurances that no federal money would be used for elective abortions. The latest version of the bill includes a handful of new taxes for investors on interest, dividends and capital gains in order to pay for the health care expansion. > > Bull or Bear? Vote in Our Poll Market observers argued that with a relatively light slate of economic and earnings releases, the market would take its biggest cue from the outcome of the vote. "If the House does vote on this, it will be a dissection of what it all means to the market," said Jay Suskind, senior vice president with Duncan-Williams. "We have the stealth capital gains taxes and what it will do to investing, the market's recent quiet rally, and health care stocks." Robert Pavlik, chief market strategist with Banyan Partners, said that passage of the bill would likely garner a negative reaction from the market due to headlines over the capital gains tax, although he argued that wise investors should view any pullback as a short-term one that provides a good entry point. "The health care bill and the capital gains tax news is more of the same noise that Wall Street shouldn't have to deal with," Pavlik said. "Personally, I'd be more concerned on the economy improving than an increase in capital gains. Focus on the longer-term trends, rather than the short-term Street noise." In addition, Pavlik called the latest version of the bill "watered down," which leads him to believe that health care stocks like Aetna ( AET), Cigna ( CI) and Humana ( HUM) won't see a big move whether the bill is passed or not.
That's not to say that the vote on health care will render a week's worth of economic data meaningless. Suskind says that with such a large focus on what the Federal Reserve's next step will be, macroeconomic numbers will be heavily scrutinized. The first release, existing-home sales data for February, will arrive Tuesday at 10 a.m. EDT alongside the Federal Housing Finance Agency's home price index for January. Wednesday's release schedule is headlined by the February read on durable goods orders, due at 8:30 a.m. EDT. Investors will also get new-home sales statistics for February Wednesday, as well as weekly crude inventory data from the Energy Department. Jobs data will be in focus Thursday with the Labor Department's weekly initial jobless claims report due at 8:30 a.m. EDT, followed Friday by the government's last estimate on fourth-quarter gross domestic product growth and the final read on the University of Michigan's consumer sentiment index for March. On the earnings front, one S&P 500 company will report fourth-quarter results and another 13 will open the books on their first quarter. Among them are Best Buy ( BBY), Oracle ( ORCL), Tiffany ( TIF), Adobe Systems ( ADBE), Walgreen ( WAG), General Mills ( GIS) and Lennar ( LEN). Market analysts also note that the end of the first quarter is on the horizon. With the U.S. averages near their highest level for the year, they argue that window dressing could begin to come into play in the coming week. "Are people going to take profits or try to catch up with this market? When does the window dressing start?" Suskind asks. "A lack of volume recently may mean more cash coming in for another leg up as they chase the rally." Pavlik says that money is coming out of money market funds and going into stocks, making him less concerned over the long term about quarter-end window dressing. "Again, it's short-term noise," he says. Instead, Pavlik says he will be closely watching action in the bond market, as a supply of $175 billion in securities will be offered in the next five trading sessions.
In addition to the week's regular offerings, Tuesday will see an auction of 2-year notes, followed Wednesday by an auction of 5-year notes. Thursday will bring an auction of 7-year notes. "That's where a lot of pressure in the bond market will come from," he says. Suskind says he'll be on the lookout for comments from Fed officials, as several regional bank presidents will offer remarks during the week. Atlanta Fed President Dennis Lockhart will speak twice on Monday, followed Tuesday by Philadelphia Fed President Charles Plosser and San Francisco Fed chief Janet Yellen, who is in the running to replace Donald Kohn as the Fed's vice chair. On Wednesday, Kansas City Fed President Thomas Hoenig -- the lone dissenting vote when the Federal Open Market Committee left the fed funds target rate unchanged at the January meeting -- will offer remarks on the financial foundation for Main Street. Fed Chairman Ben Bernanke will appear Thursday before the House Financial Services Committee to speak about exit strategy. Bernanke had been scheduled to appear on Capital Hill on Feb. 10, although the hearing was delayed due to inclement weather. Cleveland Fed President Sandra Pianalto will also speak Thursday, followed Friday by Fed Governors Kevin Warsh and Daniel Tarullo. Market participants will be on high alert for any change to the Fed's discount window rate, which is the rate the central bank charges on direct loans to banks. Rumors of a discount rate hike, which would be the second in as many months, put pressure on the stock market Thursday but also lent support to the dollar. -- Written by Robert Holmes in Boston. Follow Robert Holmes on Twitter and become a fan of TheStreet.com on Facebook.