The extreme market volatility of recent days has shaken investors, who still are seeking a clear explanation of what sent U.S. stocks into Thursday's dizzying intraday spiral.
With talk of a new credit crisis looming in Europe, the week ahead could get ugly on Wall Street.
Investors saw stock gains for the year erased in a harrowing five days of trading that pushed major indexes down by 6 percent to 8 percent.
Nervous traders, many of whom will have closed out positions on Friday, will watch closely for any developments over the weekend amid speculation the European Central Bank may move to support Greece and other debt-laden euro-zone countries.
Everyone is very jittery on what is going on over in Europe, especially in Greece, and if there is going to be contagion to Spain and Portugal and how that affects the whole global banking system, said Frank Ingarra, a portfolio manager at Hennessy Funds in Stamford, Connecticut.
Next week investors want regulators to shed more light on Thursday's sharp intraday sell-off when some stocks traded near zero and the Dow fell nearly 1,000 points -- its biggest intraday point drop ever.
COMMENTS FROM BERNANKE, OBAMA
Federal Reserve Chairman Ben Bernanke is likely to try to soothe investors' fears when he speaks during the week. On Friday President Barack Obama said regulators are investigating unusual market activity and emphasized U.S. support for a strong policy response for Europe's financial situation.
Although events have eclipsed signs of strength in the U.S. economy, including a surge in employment and stronger corporate earnings, investors will watch April retail sales data as well as earnings from Walt Disney Co and Macy's Inc for an insight into the health of the consumer.
Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York said he would be watching retail sales closely after many chain stores posted below par same-store sales figures.
Same-store sales were so weak, I think there is a lot of curiosity about what this number is going to be, he said. Retail sales ex-autos is to me the biggest one for the week.
The report on Friday is expected to show retail sales, excluding autos, rose 0.4 percent, down from a 0.9 percent ruse the month before, according to a Reuters survey.
April industrial production data and University of Michigan's May consumer sentiment, also out Friday, are both expected to show improvements over prior months.
Those reports will follow a reading on weekly jobless claims on Thursday, expected to show new claims fell by 4,000 to 440,000, supporting a picture of a slowly improving labor market.
But as investors largely ignored a report on Friday that showed an unexpected surge in U.S. jobs growth, it may take more than good macroeconomic data and strong earnings to stem the market's decline.
The S&P 500 closed out its worst week since March 2009 when indexes hit a 12 year low. The broad-based measure fell 6.4 percent in five days. Major indexes turned negative for the year.
The Nasdaq has fallen more than 10 percent since a recent peak on April 23, marking a technical correction, possibly a harbinger of further falls in the Dow industrials and the S&P 500, which have yet to drop 10 percent.
U.S. investors are starting to compare the growing European debt crisis to the events around the bankruptcy of Lehman Brother and collapse of Bear Stearns that sent markets into a tailspin in late 2008.
In an ominous sign the costs of protecting European bank debt against default have reached levels not seen since the height of the financial crisis.
For the last year we have gone straight up in the markets and people have forgotten about risk. Now all of a sudden people are at least acknowledging that there could be some risk out there. Emotionally, that's a big switch, said Tom Forester, manager of the Forester Value Fund in Libertyville, Illinois.
An emotional switch is an apt way to describe Thursday's 9 percent intraday market plunge in a matter of minutes before the indexes regained much of the losses.
Talk of erroneous trades and computerized trading programs gone haywire have further tested nerves as many exchanges canceled thousands of orders and investors were left on Friday trying to work out what they owned.
A popular measure of market turbulence, the CBOE volatility index <.VIX>, rocketed to its highest level in a year.
The Securities and Exchange Commission said late Friday it was still trying to pinpoint the cause of the crash.
The market's gyrations are likely to increase pressure on the Fed that is trying to judge how and when to ween markets off extraordinary stimulus measures, including ultra low interest rates.
Bernanke is due to participates in a question-and-answer session after a conference at the Federal Reserve Bank of Philadelphia on Thursday.
(Reporting by Edward Krudy; Editing by Kenneth Barry)