updated 5/31/2009 2:31:32 PM ET 2009-05-31T18:31:32

The stock market is looking winded from its three-month race upward.

Major Market Indices

After a quick bounce off 12-year lows in early March, Wall Street is having a harder time carving advances as investors await definitive signs of a break in the recession.

The benchmark Standard & Poor's 500 index rose 5.3 percent in May, but that was less than its 9.4 percent surge in April.

Traders have been buying stocks on kernels of economic data and corporate earnings reports that indicate the economy's slide could be slowing. But some analysts say investors might be getting ahead of themselves.

"A turning point in sentiment indicators is not a turning point in real indicators," said Bruno Cavalier, lead economic analyst at Paris-based Oddo Securities. "We remain quite cautious about the global outlook."

It's normal for the market to move before the economy does, but traders also risk stepping into the market too early. In downturns over the past 60 years, the S&P 500 index has hit bottom an average of four months before a recession ended and about nine months before unemployment hit its peak.

Some analysts say Wall Street could be in for a more difficult climb as it waits for the economy to catch up with investors' expectations. The S&P 500 index has already shot up 35.9 percent since March 9, a run that might normally take years to occur.

The coming week's full calendar of economic readings could help steer the market. Lately, there has not been enough good news to bring out some cautious buyers. Traders are often simply shifting money around to capitalize on the market's gyrations, analysts say.

"There's no new money coming into equity funds," said Joe Saluzzi, co-head of equity trading at Themis Trading LLC. He sees little to celebrate in the economy, pointing to the expected bankruptcy of General Motors Corp. "There's nothing good out there."

As the spring rally progressed through its first two months, economic readings that looked a little better than the market's grim forecasts incited heavy buying. Now, though, the snapshots of the economy are likely to be more mixed and could lead to more volatility.

"Some investors have come to expect better-than-expected economic data and that does make the market a little more vulnerable, obviously much more so than back in March," said Todd Salamone, senior vice president of research at Schaeffer's Investment Research in Cincinnati.

One example of the divide in expectations came Friday when the Commerce Department reported the economy slowed at a 5.7 percent annual pace in the first quarter. That wasn't as bad as the 6.1 percent slide the government first estimated in April but it was steeper than the 5.5 percent drop economists expected.

This week, traders will focus on the Labor Department's May employment report due Friday. The report is often seen as the most important economic reading of the month because rising unemployment can hurt consumer spending, which accounts for more than two-thirds of U.S. economic activity.

Economists expect unemployment, which stands at a 25-year-high of 8.9 percent, will increase. But any sign that job losses are slowing could help the market.

But before that report, the Commerce Department is expected to release figures on personal income and spending for April on Monday. Figures are also due on construction spending for April.

The Institute for Supply Management is expected to issue monthly reports on the manufacturing sector on Monday and the services sector on Wednesday.

The National Association of Realtors' report on pending home sales in April is slated for Tuesday. And major automakers will report U.S. sales for May on Tuesday.

GM, meanwhile, is expected to seek bankruptcy protection on Monday. The market has been preparing for the automaker to reorganize but the reality of the company seeking bankruptcy could still bruise investor sentiment.

Among other economic reports, the Commerce Department is expected to release data on April factory orders on Wednesday. Retailers will report May sales on Thursday.

Few earnings reports are expected. Homebuilder Hovnanian Enterprises Inc. is expected to report fiscal second-quarter numbers on Tuesday, while builder Toll Brothers Inc. is expected to report results on Wednesday.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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