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Another week, another strong showing for U.S. equities: The Dow Jones Industrials gained 2.06% for the quarter. The S&P 500 gained 2.29%, while the tech-heavy Nasdaq gained a moderate 2.84%.

Major Equity Indexes

Index

One-week Performance (%)

SPDR S&P 500 Trust (SPY)

+2.29

Powershares QQQ Trust (QQQ)

+2.84

SPDR Dow Jones Industrial Average (DIA)

+2.06

In the meantime, gold and silver accelerated their descent with SPDR Gold Shares (GLD) losing 5.8%, iShares Silver Trust (SLV) losing 4.1%. And Freeport-McMoRan Copper & Gold (FCX) ended the week flat.

Major Precious Metals ETFs

ETF

One-week Performance (%)

SPDR Gold Shares

-5.80

iShares Silver Trust

-4.1

Freeport-McMoRan Copper and Gold

0.0

What's in the cards for the new quarter? Wall Street will face four challenges:

The first challenge is the state and the direction of the big picture, the U.S. and the world economies -- most notably the inflation rate, housing, and the industrial sector. Any surprise here could unravel markets, especially after the weak employment and retail sales reports in the last two weeks.

Indicator

Consensus Estimate

Last Period

March CPI

0.0%

0.7

March Housing Starts

930,000

917,000

March Industrial Production

0.2%

0.8

March Capacity Utilization

78.4

78.3

March leading indicators

0.1%

0.5%

April Philadelphia

3.0%

2.0%

The second challenge will come from speeches from Fed officials, which will provide further insight on the fate of quantitative easing (QE) -- William Dudley and Janet Yellen on Tuesday morning, and James Bullard on Wednesday. A confirmation of an early exit, for instance, could support and reenforce the bearish sentiment in the precious metals markets.

The third challenge will come from the IMF report on the World Economic outlook on Tuesday and the G-20 meeting on Friday, which will help investors get more insight about the state of the world economy. Most notably, investors should look for clues of a further rift between the U.S. on the one side and China and Japan on the other regarding currency intervention. The U.S. criticized both countries over the weekend on this issue.

The fourth, and most important challenge, is a string of earnings from bellwether companies in the financial sector like CitiGroup (C), Goldman Such (GS), and Morgan Stanley (MS); the consumer sector with Coca-Cola (KO); and the technology sector with Intel (INTC). Again, any major negative surprise here would raise doubts as to whether the equities rally can continue on liquidity alone -- though each of these companies has its own company-specific issues. Intel, for instance, is still in the declining PC business, while CitiGroup is still in the grip of the Treasury Department.

The bottom line: Keep an eye on the big picture, the Fed, the IMF, and the small picture -- the earnings of bellwether companies.

Source: 4 Things That Will Determine The Direction Of Wall Street This Week