By Wallace Witkowski, MarketWatch

SAN FRANCISCO (MarketWatch)--Stocks are trading near record highs, and some say that's more due to cautious optimism than solid fundamentals.

Stocks finished higher last week, and the Dow Jones Industrial Average (DJI) set its first record close of the year. The S&P 500 index (SPX) passed into record close territory but couldn't finish there. The Nasdaq Composite Index (RIXF) closed up 1.2% on the week, though it's still down 1.3% for the year.

The workings of the Dow suggest hope is driving prices rather than the bottom line. Sales and profit trends aren't looking so hot, nor are corporate outlooks.

The 24 out of 30 blue-chip companies that have already reported are showing a 3.3% decline in first-quarter earnings, setting up the third year-over-year decline in earnings out of the past four quarters, says FactSet data. Similarly, revenue is on track to rise 0.4% for the first quarter, which would be the seventh straight quarter of sub-1% growth. Yet, over the past 12 months, the Dow is up more than 11%.

"It does not appear that results for Q1 are fueling the rally," said John Butters, senior earnings analyst at FactSet, in a note. "Perhaps the market is looking ahead at expectations for higher earnings and revenue growth in the future."

S&P 500 companies are doing a little better than their Dow counterparts on earnings. The blended earnings growth rate for the first quarter is now 1.5%, up from the anticipated 0.4% decline at the end of the first quarter but much lower than the expected 4.4% growth rate at the beginning of the first quarter.

While outlooks have not been as negative as they have been lately, it's too soon to tell if second-quarter growth is accelerating, said Nicholas Colas, chief market strategist at ConvergEx Group. Given the sluggish first quarter, expectations for the second quarter are higher, he said.

"I'd characterize them as being more faith-based than data-based," said Colas.

Analysts appear to less negative than usual. In a recent Goldman Sachs report, the firm noted that second-quarter consensus estimates have flattened out rather than declined as is customary with the progression of earnings season.

Much of the optimism stems from the lousy winter and how it affected big-ticket purchases. While not all of that will be recovered in the following quarters, companies are predicting a fair amount will, said Randy Frederick, managing director of trading and derivatives at Charles Schwab.

"Probably half the things people didn't do was because of the weather, so there's a lot of pent up demand," Frederick said.

Disney, Pfizer, Tesla

Only two Dow components report this week: Pfizer Inc. (PFE) on Monday, and Walt Disney Co. (DIS) on Tuesday. Nearly 80 companies in S&P 500 companies will report with much of the weighting in media stocks and insurers.

Along with Disney this week, 21st Century Fox Inc. (NWS)(NWSA) and MarketWatch parent News Corp. (NWSA)(NWS) report. Also reporting are CBS Corp.(CBS), Discovery Communications Inc.(DISCA), Scripps Networks Interactive Inc.(SNI), DirecTV(DTV), and Cablevision Systems Corp.(CVC)

Internet travel sites TripAdvisor Inc.(TRIP), Priceline Group Inc.(PCLN), and Orbitz Worldwide Inc. (OWW), and online deals site Groupon Inc. (GRPN) also report.

Other consumer-focused stocks of note include Whole Foods Market Inc. (WFM), and Tesla Motors Inc. (TSLA)

Insurers also figure heavily with reports from American International Group Inc.(AIG), Allstate Corp.(ALL), Prudential Financial Group Inc.(PFG), and Unum Group.(UNM)

Keep an eye on those late reporters

While earnings season hasn't been disastrous, one thing that concerns ConvergEx's Colas is that companies that report later than their sector peers can drag down sector performance.

"I tend to worry about mid-to-late earnings season because sometimes those tend to be lower-quality companies, so I tend to get a little bit cautious," Colas said.

So far, a large majority of companies in tech and consumer staples have already reported results.

While Colas did not mention any specific companies, several companies releasing results this week can be seen as late reporters.

Companies in tech reporting late in the cycle this week include Computer Sciences Corp.(CSC), Teradata Corp.(TDC), First Solar Inc.(FSLR), Nvidia Corp.(NVDA), Electronic Arts Inc.(EA), Activision Blizzard Inc. (ATVI), and Symantec Corp. (SYMC)

In consumer staples, late reporters include Molson Coors Brewing Co.(TAP.NV.T), Monster Beverage Corp.(MNST), Sysco Corp.(SYY), Tyson Foods Inc. (TSN), Keurig Green Mountain Inc. (GMCR), and Mondelez International Inc. (MDLZ)

Yellen before Congress; Ira Sohn

Economic data will be light this week. Much of it came out last week, which was packed with Federal Open Market Committee meeting, ISM data, first-quarter GDP, and the April jobs report. That, however, doesn't mean there won't be non-earnings catalysts.

Fed Chairwoman Janet Yellen will be speaking before Congress on Wednesday and Thursday about the economy. Also the JOLTS, or Job Openings and Labor Turnover Survey, will be released on Friday. Yellen has been known to touch upon the JOLTS when addressing the employment outlook so those numbers may provide some color on April's jobs number and the FOMC statement, said Colas.

This week will also see longer-maturity Treasury auctions with the 10-year Treasury(10_YEAR) this Wednesday and the 30-year Treasury(30_YEAR) this Thursday. This past Friday, the 10-year Treasury note hit its lowest yield since February.

Oil prices are also something to look out for with the approach of summer driving season, especially with an emergency session of the United Nations Security Council called on Friday over Ukraine. Oil briefly topped $100 a barrel on Friday.

Developments in Ukraine themselves should do little to dent markets in the long run, said Schwab's Frederick. MarketWatch's Mark Hulbert supports that view in a recent column.

Also, the limelight shifts to other investing titans with the close of Warren Buffett's Berkshire Hathaway shareholder meeting. On Sunday, billionaire activist investor Carl Icahn criticized Buffett for not voting against Coca-Cola Co.'s (KO) executive pay proposal, which Icahn characterized as excessive.

Then on Monday, hedge fund managers trot out their best investment ideas at the annual Ira Sohn Investment Conference in New York. There will be presentations from Bill Ackman, David Einhorn, Jeffrey Gundlach, among others.

More from MarketWatch:

Warren Buffett: Small investors have one big advantage

'Herbalife made me feel sleazy,' says former distributor at Bill Ackman event

MarketWatch's coverage of Berkshire Hathaway's annual meeting

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