Wall Street Rally Rests on Data Due This Week (ext: ABCNews)

The coming week may well be a turning point for the stock market and its March rally.

After three weeks of gains based on signs that the economy might be turning around, investors will get a batch of reports that could provide more evidence of whether the recession is easing or not. Among the data: the government's report on how many jobs were lost last month and the Institute for Supply Management's assessment of the health of the manufacturing and service sectors.

If the numbers come in better than forecast, many investors are likely to keep buying, placing further bets that a recovery might indeed be in its very first stages.

But analysts say upbeat reports might not necessarily set off a huge advance. Wall Street faltered on Friday, a sign that investors are buying with caution, not abandon.

"If we see upside on the data, we might hold — or rally some more," said Doug De Groote, a managing director at United Wealth Management, a division of United Capital Financial Advisors.

Reports that come in weaker than expected are likely to take the market down. Wall Street's rally was fed in part by surprising gains in housing and factory orders numbers, and numbers that imply the recent data was a fluke could send investors out of the market again.

Still, analysts do see an improving tone on Wall Street that is due to more than economic data. De Groote said much of the market's advance came because of the government's efforts to help the credit markets and economy. On Monday, when the government released details of its plan to purchase toxic assets from banks, the major indexes rose about 7 percent.

"There's a lot of rhetoric out of Congress giving hope we'll get through this," said Roy Williams, chief executive of Prestige Wealth Management Group.

Last week, the Dow Jones industrials gained 6.8 percent, the Standard & Poor's 500 index picked up 6.2 percent and the Nasdaq composite index rose 6 percent.

For Wall Street, what happens in the housing industry reflects more than Americans' willingness to make big financial commitments. While that's critical for the economy to heal, a pickup in home sales would also point to an easing of the now six-month-old credit crisis.

"Housing is real important to the stabilization of broader markets," Williams said.