After the S&P 500 slipped on Friday and broke a two-week rally, stocks may find tougher sledding in the coming week as investors may be unwilling to push the benchmark index to a record high.
The Standard & Poor's 500 has risen 3 percent over the past three weeks, as investors have largely been willing to forgive a flurry of soft economic data due to harsh winter weather.
The main focus will be Part Two of Federal Reserve Chair Janet Yellen's semi-annual monetary policy testimony before the Senate Banking Committee on Thursday.
Ironically, Yellen's congressional testimony before U.S. lawmakers was rescheduled after a Senate panel previously canceled the original hearing date due to a recent snowstorm in Washington, D.C.
Yelena Shulyatyeva, an economist at BNP Paribas in New York, said investors and economists will pay attention to Yellen's answers on "questions about the weather, how much does she think the weather is impacting economic activity and how much will (the Fed) pay attention to that."
Market participants will also monitor Yellen's statements for any signs regarding the central bank's plans as it tapers its stimulus measures. As the U.S. unemployment rate nears the Fed's 6.5 percent target, the debate has grown over whether interest rates should be raised.
St. Louis Federal Reserve Bank President James Bullard said on Friday that the U.S. economy is headed for a good year of growth, and he expects the central bank to continue to pare its massive bond-buying stimulus.
THE CONSUMER CONFIDENCE GAME
Next week's economic calendar includes consumer confidence, new home sales and several other reports on the housing market, durable goods orders, the preliminary data on gross domestic product and the final February reading on consumer sentiment from Thomson Reuters and the University of Michigan.
While the housing data is likely to be discounted as a result of weather issues, the consumer confidence data may still provide insight to investors as to whether economic growth remains on track.
"If you look at consumer confidence, looking past the weather cycle of indicators, we find the economic outlook of consumers has not changed materially despite all the other indicators that may suggest otherwise," said Anastasia Amoroso, global market strategist at J.P. Morgan Funds in New York.
"So if consumer confidence comes in as the preliminary reading did, that suggests the end-user demand for goods and services did not fall off a cliff, but rather has been deferred due to weather."
Earnings season will also wind down,