By Caroline Valetkevitch and Ryan Vlastelica
NEW YORK (Reuters) - For a moment, U.S. stocks looked like they were headed for a long-awaited pullback last week.
But that didn't happen.
After the latest signs of a healthier economy, stocks may have more room to rally in the week ahead.
The benchmark Standard & Poor's 500 Index <.SPX> registered another week of gains on Friday, its fifth in six weeks, once again defying calls for a reversal in its five-month rally.
Friday also marked the three-year anniversary of the S&P 500's plunge to a 12-year low, a move that was followed by a sharp rally. The S&P 500 still is up 102 percent from that low.
"Everyone's looking for a correction here, which just tells me we're probably going to have another little run up before we get that correction," said Scott Billeaudeau, a portfolio manager at Fifth Third Asset Management in Minneapolis.
Much of the optimism has come from signs of further improvement in the U.S. economy. Friday's stronger-than-expected jobs report -- the most widely watched U.S. economic indicator -- gave the stock market more wind in its sails.
The S&P 500 ended the week up 0.1 percent, even though on Tuesday, it marked its weakest day so far in 2012 on concerns about a default by Greece on its country's debt.
Still, Friday's news of a technical default by the country was mostly brushed aside by investors. A derivatives group said Greece triggered the payment on default insurance contracts by using legislation that forces losses on all private creditors.
"While concerns about Greece aren't going away, the worst-case scenario has been averted, and the payroll report is another reason for investors to be confident," said Leo Grohowski, who oversees about $171 billion in client assets as chief investment officer at BNY Mellon Wealth Management in New York.
Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Bethesda, Maryland, said U.S. stocks may still sell off in the near term, but it was not likely to be a drastic decline.
"There's so much cash in institutional portfolios, in individuals' portfolios," said Trunow, whose firm manages about $13 billion in assets.
So much money "left equity asset classes and then went elsewhere for safety," she added. "I think the long-term move is on the upside."
Technically, the market is hovering near key resistance levels, which could influence stocks' direction this week, said Chris Burba, a short-term market technician at Standard & Poor's in New York.
If the S&P 500 pushes above 1,376, that could suggest further gains ahead, while holding at or below that level could indicate more selling, he said.
Speculation that the Federal Reserve may announce more quantitative easing has kept some investors upbeat, but there has been nothing to suggest that the Fed will change its policy.
The Federal Open Market Committee, the Fed's policymaking panel, is scheduled to meet on Tuesday, with a statement expected afterward.
February retail sales, due on Tuesday morning, will be among the week's most-watched reports. That data, due on Tuesday, is expected to show that last month's retail sales rose 1 percent, according to economists polled by Reuters, compared with a gain of just 0.4 percent in January. Excluding autos, February retail sales are seen up 0.7 percent, matching January's gain.
With oil prices well above $100 a barrel, investors will take note of February inflation data this week. The U.S. Producer Price Index is due on Thursday, followed by the Consumer Price Index on Friday.
Last month's overall PPI is forecast to have gained 0.5 percent -- well above January's rise of just 0.1 percent, according to a Reuters poll of economists. Excluding volatile food and energy prices, February core PPI is expected to have edged up just 0.2 percent, down from January's 0.4 percent gain.
Inflation at the consumer price level, measured by the overall CPI in February, is forecast to have risen 0.4 percent - or twice January's gain of just 0.2 percent. Excluding food and energy, core CPI is seen up just 0.2 percent, matching January's percentage gain.
Consumer sentiment data also is expected on Friday. The Thomson Reuters/University of Michigan consumer sentiment index is forecast to show an increase to 76.0 in the preliminary March reading, from February's level at 75.3.
The recent string of stronger data has raised expectations that the trend will continue.
"It was a decent payroll number today, to be sure, but the market needed a decent number," said Barry Knapp, managing director of equity research at Barclays Capital in New York, after Friday's jobs report for February. "We need the data to be good at this point."
While the overall S&P 500 is up 102 percent from its March 9, 2009, closing low, there is a wide difference in the performance of individual S&P sectors, which is evidence of investors' uncertainty, Standard & Poor's analyst Howard Silverblatt said.
Since the March 2009 low, the S&P consumer discretionary index <.GSPD> has performed the best -- up about 175 percent. The S&P telecommunications index <.GSPL> has done the worst, with a gain of 49 percent.
"Investors, to some degree, have reacted to short-term events as opposed to longer-term investing," Silverblatt said.
(Wall Street Week Ahead runs every Sunday. Comments on this column can be sent to email@example.com or firstname.lastname@example.org)
(Reporting by Caroline Valetkevitch and Ryan Vlastelica; Editing by Jan Paschal)