Wall Street will turn its attention toward Iraq over the weekend, watching for any major disruptions during Sunday's election there and whether it will affect the country's oil output.

Investors are worried that major violence in Iraq could choke off its oil exports and push crude oil prices closer to the $50 level.

Rising oil prices have grabbed Wall Street's attention again, as the market worries that higher energy costs will pinch corporate profits and hit consumers in the wallet.

"If things go off without too much of a hitch in Iraq, then we could have a pretty good week," said Edgar Peters, chief investment officer and director of PanAgora Asset Management Inc. "I think you could see a sentiment bounce."

Market bulls are certainly looking for something to cheer about.

For the week, U.S. stocks ended slightly higher -- marking their first weekly gain of 2005. The Dow Jones industrial average (search) finished the week up 0.32 percent, while the Standard & Poor's 500 index (search) gained 0.29 percent, and the Nasdaq Composite Index (search) inched up 0.08 percent.

In contrast, all three major U.S. stock indexes are down for January -- and the year to date. Through Friday's close, the Dow was down 3.3 percent for the month and the year so far, while the S&P 500 was off 3.35 percent, and the Nasdaq was down 6.4 percent.

"The market overreacted in January," Peters added, saying that the market is undervalued and that he expected buyers to return to the table in February.

Interest rates also will be in focus next week, when the Federal Reserve's (search) policy-making committee meets. The Fed is expected to raise rates another quarter percentage point. The decision will be announced Wednesday at the conclusion of the Federal Open Market Committee's two-day meeting.

Higher interest rates weigh on stocks as they increase borrowing costs for businesses and consumers.

Market strategists have hoped that the Fed will continue with a gradual pace of rate hikes, as a more aggressive approach to stave off inflation would drag heavily on the market.

Capping the week is the all-important U.S. payrolls report, which offers a glimpse into the economy's health. It will offer the first look at the labor market's strength in the new year.

Economists polled by Reuters expect the report, set for release at 8:30 a.m. Friday, to show that U.S. nonfarm payrolls added 190,000 jobs in January, compared with 157,000 in December.

A flood of more quarterly earnings reports is also on tap.

Big oil producer Exxon Mobil Corp. (XOM) and entertainment giant Walt Disney Co. (DIS) -- both Dow components -- will release results Monday, while another Dow member, the Boeing Co. (BA), a defense contractor and an airplane maker, will issue its earnings report Wednesday.

Cereal maker Kellogg Co. (K) will post its quarterly results Monday, while conglomerate Tyco International Ltd. (TYC) will release earnings Tuesday, and online retailer Amazon.com Inc. (AMZN) will report Wednesday.

As of Friday morning, the companies in the S&P 500 that had reported earnings so far showed a 16.3 percent profit growth in the fourth quarter, an increase roughly in line with what analysts expected.

Of 268 S&P 500 companies reporting, 50 have missed analysts' expectations, while 181 have beaten estimates. A year ago, with a similar number of companies reporting, 30 had missed and 184 had beaten estimates, according to Reuters Estimates.

"Revenues remain strong," a UBS research note said. "But margins are pressured by rising costs for materials, worker benefits, new initiatives, regulation and interest expense."

Profit growth in the S&P 500 is expected to trail off throughout the year.

Analysts also didn't expect much carry-over from the gross domestic product data released Friday, which showed the U.S. economy grew at a weaker-than-expected annual pace of 3.1 percent in the fourth quarter of 2004. That was the slowest pace of growth since the start of 2003.

With all the data and earnings reports, the key to next week, several analysts said, will be getting started on the right foot Monday.

"If the Iraq elections go OK, that is going to be much more positive for the stock market than any of these economic figures" released Friday, said Jeffrey Saut, chief investment strategist at Raymond James Financial.