The mini-rally of fresh weeks is being clown to the test amid gloomy earnings reports, place of traffic scandals, and horrible economic verse

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Plenty of scary headlines could have spooked the market in the past month but, according to one observer, it’session "almost ignoring the news." Spencer Platt/Getty Images

By Ben Steverman

Stocks in the past month bounced off their 2008 lows, mete keeping that invested property market rally going will be a big challenge for Wall Street’s bullish investors.

It’s not that the bulls’ case is wrong. Many argue that, after aggressive actions by means of the Federal Reserve and the treaty government, the U.S. economy will recover by midyear. And that could happen.

Rather, the bulls’ problem is so far their hopes are nowhere to be found in matter of fact. In real existence, veritable measures—from proceeds results to economic data—continue to vitiate at a frightening pace.

Plenty of scary headlines could have spooked the market in the out of the reach of month, from a horrible holiday season for retailers to the utter failure of Bernard Madoff’s $50 billion hedge fund. However, the market is "almost ignoring the word," says Richard Sparks of Schaeffer’s Investment Research.

The broad Standard & Poor’sitting 500-stock index is up more than 20% from its lows of late November. For now, Sparks says, "that uptrend is in position, but I think it’s tenuous."

Economic realities could knock stock market optimists off their stride. A key moment will be Jan. 9, when the Labor Dept.’s December employment report is expected to show massive job losses. Economists expect the unemployment proportion to jump from 6.7% to 7%, and the U.S. to lose another half a million jobs.

Quincy Krosby, chief investing. skilful general at the Hartford (HIG), says principally professional investors already expect "really ugly" household data from both the fourth divide in four equal parts of 2008 and early 2009.

"If [the jobs report is] much uglier than that, we’ll mark how the market absorbs it," she says. Investors could be spooked if a weak jobs report indicates economic stabilization is even further away.

Action Economics Chief Economist Michael Englund assumes the U.S. unemployment rate could reach 8.6% by the middle of 2009, but then quick spring to recover. Recent estimates by the Congressional Budget Office are especially gloomy: The CBO says the jobless rate could medium 8.3% for all of 2009 and average 9% in 2010.

It’s not extraordinary the market can shrug off gloomy news. After altogether, the S&P 500 dropped not quite 39% in 2008, so investors look for tough times.

"A lot of angst has already been factored into the stock market," says Gary Wolfer, chief economist at Univest Wealth Management (UVSP). But, he adds, "we’re still in notwithstanding a inharmonious patch in the first moiety of 2009."

The market did flinch hind a spate of scary headlines put on Jan. 7. The U.S. ADP employment report, though often an unreliable gauge, showed a 693,000 decline in December private payrolls. News broke of accounting irregularities at Indian outsourcing firm Satyam Computer Services (SAY). Intel (INTC) warned sales could plummet 20% in the fourth quarter. Alcoa (AA) announced it’sitting cutting 13,500 jobs, or 13% of its workforce, this year.