NEW YORK - After nine months of turmoil that started with the collapse of the subprime-mortgage market, Wall Street appears to be at a turning point of sorts.
The data of the last few weeks have given investors some hope that the worst of the credit crisis has passed, that the economy is not losing jobs at a dangerous rate, and that inflation is not out of control. The result has been relative calm in the financial markets, enabling the major indexes to reach levels they had not seen since early in the year - including the Dow Jones industrials' brief return this month to the 13,000 mark.
Analysts say data to be released in June and July will determine whether Wall Street extends its recovery or backtracks. If it moves higher, it will break an old habit of pulling back during the summer doldrums - and some analysts say they believe this may indeed come to pass.
"There's a bullish momentum that overrides the typical seasonal factors that would tell you to sell stocks in the summer," said David Kotok, chairman and chief investment officer of Cumberland Advisors Inc., of Vineland, N.J.
The market also will have its eye on the rising price of oil as it reviews each economic report. If oil soars higher, it could temper the market's enthusiasm.
For now, the big bet is that economic reports and other key data will show that the United States was in a mild recession - and that a recovery already is in play. If investors get the confirmation they are looking for, cash could stream into the stock market.
The next two weeks will bring important numbers, including April wholesale inflation and existing-home sales; another reading on first-quarter gross domestic product; and two critical reports on consumer confidence and spending - which may show whether increasingly expensive gasoline is making households cut back on discretionary purchases.
When reports start coming out in early June, they should indicate, among other things, whether the string of interest-rate cuts since last summer has gotten a hobbled economy growing again. In the first week of June, the Institute for Supply Management is to issue its assessments of the manufacturing and service economies during May; the government also is to release its report on whether jobs were created or lost that month.
"We're going to find out if the stock market is right, and that this will be one of the shallowest recessions on record," said Dan Seiver, a finance professor at San Diego State University. "Or, that the economy is going to be sicker longer, and when the market realizes that it will have a nasty down leg."
In the second week of June, one of the key reports will be the Fed's own evaluation of the economy, its Beige Book survey of how the regions of the nation are faring in the current economic climate.
Along with Wall Street, the Fed will be parsing the data. And the central bank itself will provide one of the most crucial economic indicators when it meets again June 24 and 25 - Wall Street wants the Fed to provide a stronger sign that it believes April's quarter-point cut of the fed funds rate will be the last, and that the economy is back on track for growth.
Analysts such as Kotok are betting the Fed's efforts to energize the economy have worked - and that will give the market permission to charge ahead.
"Our view is the Fed will succeed because it has the power to do so, and it has now caught on to the fact that this is serious," he said. "The stock market is anticipating it, and confirmation of this might not be that far off."