U.S. equity ETFs in recent weeks have been consolidating after the big gains posted during the first three months of the year. As the S&P 500 fluctuates near the key 1,400 level, stock ETFs are looking to the Federal Reserve and the corporate earnings outlook for their next move.

Next week, investors will get the latest Fed interest rate announcement on Wednesday after the two-day meeting. Also, Fed chief Ben Bernanke will hold a press conference following the announcement.

“In January, the Fed published the forecasts of FOMC members both for the economy and for short-term interest rates for the next few years. At the end of the first quarter, it appeared that they might upgrade these forecasts. Now, this seems less certain. Either way what the Fed publishes next week will be very significant for fixed income markets used to the support of a very dovish Fed,” said JP Morgan Funds chief market strategist David Kelly.

The central bank has pledged to keep interest rates low until late 2014. Stock ETFs have been sensitive to expectations of further quantitative easing from the Fed.

Meanwhile, first-quarter earnings reports continue to filter in with over 25% of the capitalized weight of the S&P 500 reporting this past week.

“So far, surprises have generally been positive but this is against a backdrop of diminished expectations. A key question for the stock market will be whether this quarter’s results allow companies to upgrade their assessments of earnings for all of 2012,” said JP Morgan’s Kelly.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.