Stocks face stress tests, earnings, Fed

By Ellis Mnyandu

NEW YORK (Reuters) - U.S. stocks may run into some turbulence next week as the impending release of bank "stress test" results, a Federal Reserve meeting and a flood of earnings will give investors some reasons for caution.

While investors have been heartened by a recent flurry of surprisingly upbeat earnings and economic data, strategists said there was still concern about whether the government has done enough to shore up the banking sector.

Besides fretting about bank stress tests, investors also will be confronted by a raft of economic indicators in the coming week. The data menu includes readings on February home prices, April consumer confidence, weekly jobless claims and an advance report on first-quarter real Gross Domestic Product.

The Federal Reserve will be in the spotlight as the central bank's policy-making panel is set to hold a two-day meeting beginning on Tuesday.

"People are looking for positive news out of the stress tests, saying that the banking system is now OK," said Doug Roberts, chief investment strategist at ChannelCapitalResearch.com in Shrewsbury, New Jersey. "I think there could be some rockiness next week."

Getting the banking sector stabilized is seen as one of many crucial steps to get the economy on the road to recovery.

STRESS AND VOLATILITY

Worries about the banking sector's health helped drive the market to 12-year lows early last month, and since those significant lows, the benchmark S&P 500 .SPX has rebounded 28 percent.