Stock investors head into next week with added worries about the sustainability of the recent rally and a desire to reduce risk, as shown by the stampede out of commodities on Thursday.
Stocks also will begin to lose the support they've enjoyed from stronger-than-expected earnings since the first-quarter reporting period is almost at an end.
The drop in commodities this week spilled over into commodity-related stocks, which were among the top performers in the last two quarters.
The Standard & Poor's energy index <.GSPE> ended the week down 7 percent, its biggest weekly drop in a year, and the iShares Silver Trust suffered its worst week of outflows ever after heavy losses in the precious metal.
While the commodities rout may be done for now, it has left many investors worried about the ramifications.
It's hard to pinpoint the time when the bubble bursts and hard to go against the current, but when it bursts it's precipitous usually, said Natalie Trunow, senior vice president and chief investment officer of equities at Calvert Asset Management Company in Bethesda, Maryland, which manages about $14.8 billion in assets and is underweight energy.
With first-quarter earnings and also the Federal Reserve's QE2 purchasing program coming to an end, the stock market could be vulnerable to some weakness in the short term, she said.
I wouldn't be surprised if we had a somewhat softer summer or somewhat softer next couple of months, said Trunow, who said she is still positive on the U.S. market longer-term.
The S&P 500 <.SPX> suffered its worst week since March, even with Friday's surprisingly strong jobs report that allowed the index to end a four-day losing streak.
It is now just above critical support at 1,330. A close below that level could turn the intermediate-term picture bearish, according to a note from Larry McMillan, president of McMillan Analysis Corp.
SENTIMENT STILL UPBEAT
Despite this week's skittishness, sentiment for the market is positive longer term, and technical indicators do not suggest the market is overbought.
Our view is still unchanged; we still like the market, said Jeff Rubin, market strategist at Birinyi Associates in Westport, Connecticut.
Much of the fundamental picture remains bullish for stocks, said Hank Smith, chief investment officer at Haverford Trust Co. in Philadelphia.
The economy and valuations remain attractive, he said. We remain bullish, but with any bull market, it's healthy to have pullbacks.
Friday's Labor Department report, which showed U.S. employment increase more than expected in April and U.S. companies created jobs at the fastest pace in five years, gave evidence of the underlying strength in the economy, analysts said.
But labor has been among the weakest areas, and next week's jobless benefits claims and retail sales data will be watched for further clues on the jobs picture and health of consumer spending.
In earnings news, a number of retailers are expected to report next week, including Macy's , Nordstrom and Kohl's .
Earnings estimates have risen since the start of the reporting period. Profits for S&P 500 companies are now expected to have climbed 18 percent in the first quarter from the year before, up from an estimated 13 percent rise at the start of April, according to Thomson Reuters data.
Of the 438 S&P 500 companies that have reported so far, 69 percent have beaten analyst earnings expectations. That's roughly in line with the high rate of beats seen in recent quarters.
Adding to nervousness, a small group of European finance ministers were meeting to discuss the euro zone debt crisis, and Greece denied a media report speculating the country was considering leaving the euro zone.
The speculation caused stocks to trim some of their gains on Friday.
Friday marked the one-year anniversary of Wall Street's flash crash when prices suddenly plunged and nearly $1 trillion was wiped off U.S. stocks' value in a matter of minutes before the market bounced back.
The crash shook many investors' confidence, but the market regained steam and has rallied since about the start of September.
The S&P 500 is up about 28 percent since then.
(Additional reporting by Doris Frankel, Editing by Kenneth Barry)