Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 20, 2020.

Lucas Jackson | Reuters

Investors are braced for a barrage of earnings news, and the debate in Washington around the next stimulus package may also be an important catalyst for markets since it has implications for the economic recovery.

Big tech names, includingMicrosoft, Intel, Twitter and IBM, are among companies reporting in the week ahead, as is high-flying Tesla. Blue chips Coca-Cola, Verizon, American Express and Travelers are also among the dozens of major companies releasing results.

Congress returns from its break and should pick up the pace of negotiations towards a new fiscal stimulus package, which is expected to address aid for state and local governments and enhanced unemployment benefits. Unemployment benefits, including the $600 additional weekly payment now going to millions, is expected to be a hot topic of discussion, as the benefit ends on July 31.

There are just a few items of note on the economic calendar, including existing home sales on Wednesday, unemployment claims data on Thursday and new home sales on Friday.

The spread of the coronavirus will also be closely monitored, as well as any signs of medical progress. The Lancet medical journal is expected to releaseearly stage human trial data Monday on a vaccine developed by Oxford University and AstraZeneca.

Investors also will be watching the market's own dynamics in the week ahead. There is tension within the market between the bubbly run-up of tech and momentum names on the Nasdaq, and the broader market, or S&P 500, which is basically still flat for the year. The Nasdaq is up 17% year to date, but in the past week lagged other indices, turning in a loss, while the Dow and S&P 500 were both higher.

The Nasdaq's outperformance came to anabrupt end Monday, and it has lagged since then. In dramatic fashion, the index rose sharply to new highs, with many big tech names and Tesla also hitting highs. Within the same session, there was a massive reversal in the index and in tech and momentum names, and they closed sharply lower.

Now strategists are watching to see if the froth will be let out slowly or blow off in a big move that takes the rest of the market with it.

"We expect the push and pull of the Nasdaq to continue and have sustained volatility, in our view, throughout the earnings season," said Julian Emanuel, head of equity and derivatives strategy at BTIG. "Volatility could be to the upside, as well as the downside, but in our view, in aggregate, the Nasdaq is likely to correct."

Emanuel said the volatile reversal in the Nasdaq does not bode well for the Nasdaq, and it could see a 10% correction. There's been a surge of retail activity in some of the frothiest names, such as Tesla, which surged from about $1,000 at the end of June to a high of $1,795 during Monday's session. It is since about $300 per share lower.

"The combination of public participation and just incredible valuations makes the sector very, very vulnerable. ... It's the sector with the highest earnings expectations," said Emanuel. "There's virtually nothing that management can say at these valuations that's going to create further upside to these names."

Tesla and Microsoft report earnings Wednesday, and Twitter reports Thursday.

As Congress heads back to Washington in the coming week, expectations are rising that the fiscal stimulus package could be slightly more than Republicans were previously expected to approve.

When Congress broke for the July 4 holiday, there was a big divide on how much stimulus should be added, on top of the $2.4 trillion already adopted. The Democratic proposal was for $3 trillion, while Senate Majority Leader Mitch McConnell said no more than $1 trillion. Now the gulf has narrowed, but House SpeakerNancyPelosi said the $1.3 trillion under discussions is not enough.

Cornerstone Macro's Andy Laperriere said the package could now be $1.5 trillion or more, more than he expected just several weeks ago. He said more money is now expected for state and local governments, local schools, public health, virus testing and payments to support individuals..

"Republicans really want to use this bill to encourage and incentivize businesses and schools to open. But I think the big thing is a month ago, the top priority of Republicans was to keep this bill small," he said.

One of the most controversial elements of the CARES stimulus package was the $600 weekly payment to people who were already collecting unemployment.

The payment is likely to be significantly reduced and then ultimately phased out, but that will only come after compromise."There's going to be some lines-in-the-sand issues, and this is one of them," said Laperriere, head of policy at Cornerstone.

President Donald Trump has said he won't sign the bill unless there is a payroll tax cut, which was previously rejected by Congress. Payroll taxes are paid by both employers and employees, and they fund government programs, including Medicare and Social Security.

Strategists said the market could react to the deliberations if they take longer than expected, or the funds are viewed as insufficient.

Michael Schumacher, Wells Fargo director of rate strategy, said the bond market will focus on how quickly the government plans to payout the stimulus and also the degree to which the Treasury will ultimately have to increase auction sizes to pay for it.

If Congress keeps to its schedule, it needs to approve the package before the end of the month, when it heads to another recess for the entire month of August.

Monday

Earnings: IBM, Halliburton, Zions Bancorp, Cal-Maine Foods, Steel Dynamics, Royal Phillips

Tuesday

Earnings: Coca-Cola, Lockheed Martin, Texas Instruments, Snap, CIT Group, Novartis, Synchrony Financial, UBS, Philip Morris, Paccar, Prologis, United Airlines, Intuitive Surgical, Capital One, Interactive Brokers, Teradyne, iRobot, Canadian National Railway

8:30 a.m. Philadelphia Fed nonmanufacturing PMI

Wednesday

Earnings: Microsoft, Tesla, Discover Financial, CSX, Chipotle, Whirlpool, Kinder Morgan, Equifax, Northern Trust, Biogen, Nasdaq, Check Point Software, KeyCorp, Baker Hughes, Thermo Fisher, Canadian Pacific Railway, Netgear, Suncor

9:00 a.m. FHFA home prices

10:00 a.m. Existing home sales

Thursday

Earnings: AT&T, Travelers, Intel, Twitter, Blackstone, ETRADE, Dow, Union Pacific, American Airlines, Citrix, Kimberly-Clark, Alaska Air, Freeport-McMoRan, Hershey, PulteGroup, Mattel, Verisign, AutoNation, AllianceBernstein, Fifth Third, AutoNation, Roche Holdings, Reliance Steel, Air Products, Daimler, Unilever, Nucor, Quest Diagnostics, Yamana Gold, Skyworks Solution

8:30 a.m. Initial claims

Friday

Earnings: American Express, Verizon, Honeywell, Schlumberger, Equinor, Bloomin' Brands

9:45 a.m.Manufacturing PMI

9:45 a.m. Services PMI

10:00 a.m. New home sales

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Earnings and fiscal debate could be catalysts for stocks in the week ahead - CNBC