Banks, Fed, earnings, flu in view

By Ellis Mnyandu

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

Fears of a global swine flu pandemic developed into another factor to watch over the weekend with new infections in the United States and Canada discovered on Sunday, and as millions of Mexicans hid indoors to avoid a virus that has already killed up to 81 people.

But investors said that as this point, news on the state of the financial system and earnings would drive sentiment and that information about the illness was too sparse to influence the New York open on Monday. News of the flu spreading, however, could weigh on the market as the week progresses.

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 will deal with a raft of economic indicators this week. The data menu includes 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. The policy statement is scheduled for release at 2:15 p.m. (1815 GMT) on Wednesday.

"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" this week.

DOWN AND OUT IN BEVERLY HILLS