With the conflicting forces of profit jitters and economic optimism pulling investor sentiment in opposite directions, the week ahead is likely to be a flat one as uncertainty paralyzes traders and fund managers.

The earnings season, when companies report quarterly profits and revenues, fires up the week after next. Until then, investors have little in the way of fundamental signposts to guide new stock purchases or sales. 

"I see stocks going sideways as investors wait for earning reports to start trickling in," said Scott Vergin, who helps manage $3.5 billion for the Lutheran Brotherhood group of funds. "Interest rates aren't going lower. The thing that's really going to drive the market is earnings." 

Still, any positive signals from data on manufacturing and unemployment, expected Monday and Friday, respectively, could wake up Wall Street. 

If companies don't use next week's lull before earnings season to warn their profits will miss forecasts, some bullish investors say stocks could move higher. 

"If you don't see pre-announcements, there's a chance earnings will come through" better than expectations, said Thomas Garcia, who helps manage $2.5 billion for Thornburg Investment Management Co. 

But barring such upbeat signs, Wall Street will remain on the sidelines. 

"We've got to start seeing the 'earnings' side of the price-to-earnings equation to move forward," said Timothy Leach, chief investment officer at Wells Fargo Private Asset Management, adding he believes stocks are fairly priced now. "People are playing it cautiously." 

For the holiday-shortened week, stocks edged lower. The Standard & Poor's 500 index declined 0.1 percent, while the blue-chip Dow Jones industrial average slipped 0.2 percent. The Nasdaq lost 0.3 percent for the week. 

Stock markets were closed on Friday for the Good Friday national holiday. 

For the first quarter, which ended on Thursday, and the year to date, the S&P 500 inched down 0.1 percent, while the Nasdaq composite lost 5.4 percent. In contrast, the Dow average gained 3.8 percent for the quarter and the year so far. 

Shares of retailer Kmart Corp. (KM) earned the dubious distinction of being the stock with the biggest decline during the first quarter, dropping 67 percent. Credit card issuer Providian Financial Corp. (PVN) was the period's best performer, with a gain of 121 percent.

SPOTLIGHT ON EARNINGS AND WARNINGS 

A trickle of first-quarter earnings reports will keep investors on their toes as the second quarter of 2002 kicks off on Monday. Companies to report include home-products retailers Best Buy Co. Inc. (BBY) and Bed Bath & Beyond Inc. (BBBY). Among the 30 companies whose stocks make up the blue-chip Dow Jones industrial average, the first to report earnings will be Alcoa Inc. (AA), the world's No. 1 aluminum producer. 

The few earnings next week will share the spotlight with last-minute profit warnings. 

So far, 48 percent of all 801 pre-announcements have warned the companies won't meet forecasts, according to Thomson Financial/First Call. About 30 percent have said they'll beat forecasts. 

This is the most bullish pre-announcement season since regulation Fair Disclosure (Reg FD) required Corporate America to release material information to all investors at the same time, First Call said. Previously, companies would single out analysts or favored investors for privileged business insights. 

"I'm somewhat enthusiastic about the positive-to-negative announcements ratio, but it's going to be very important to see how many more negative pre-announcements we see, especially in the software sector, since many of these guys ship up to the last day of the quarter," said Seth Tobias, general partner at hedge fund manager Circle T Partners in New York. 

If analysts are correct, the first quarter will mark the last period for falling profits this year. Companies in the S&P 500 are expected to show earnings dropped an average of 8.8 percent in the first quarter, according to First Call. 

But the second quarter is forecast to bring a revival of 8.8 percent growth. For the year, earnings are on track to rise about 16.5 percent, up from the 21.7 percent tumble last year. 

A LOOK AT FACTORIES AND JOBS 

The week will bring a slew of fresh economic data. 

On Monday, investors will scrutinize a gauge of the U.S. manufacturing sector, which the Institute for Supply Management calculates from order, production and inventory data. 

The index is expected to remain steady at 54.7 in March, the same as the month before. Wednesday will bring ISM's non-manufacturing data. 

On Friday, fund managers and traders will jump on the nonfarm payrolls report, which is expected to show the unemployment rate rose to 5.6 percent in March from 5.5 percent in February. A higher-than-expected jobless rate may slow the pace of economic recovery, investors said. 

"That's always a big number" because it can signal whether the U.S. Federal Reserve will raise interest rates later in the year, said Brian Finnerty, co-head of capital markets for C.E. Unterberg Towbin. "There's no way the Fed could raise rates in the face of rising unemployment. Well, they could, but they'd get a lot of flack." 

The Fed cut rates 11 times last year, leading short-term interest rates to 40-year lows in an effort to salvage the crumbling U.S. economy. 

Now most dealers say they expect the Fed's policy-setting arm to hold rates steady until at least the middle of this year. However, a hefty majority anticipate the Fed to start raising rates by the end of 2002.

Reuters contributed to this report.