By Anora M. Gaudiano, MarketWatch

The good news about second-quarter earnings growth is that it was even better than in the previous quarter, and positive guidance from executives implies a certain level of optimism about the rest of the year.

The bad news is that all of that is now priced into the market. And with the dog days of summer now upon us, the market in the next few weeks is likely to be roused only when investors react to major headline news.

Read: Wall Street's sleepy summer could be setting up the next stage of stocks' bull run (http://www.marketwatch.com/story/wall-streets-sleepy-summer-could-be-setting-up-the-next-stage-of-stocks-bull-run-2018-07-25)

A good example of such a mini-shock in the news came on Friday, when global equity markets, especially in the developing world (http://www.marketwatch.com/story/emerging-markets-slump-as-turkish-lira-plunges-2018-08-10), sold off in reaction to Turkey's currency crisis, which saw that country's currency plunge 15% in the face of an escalating trade dispute with the U.S.

The S&P 500 (http://www.marketwatch.com/story/us-stocks-pulled-into-global-selloff-as-turkeys-currency-crisis-raises-the-alarm-2018-08-10) fell 0.7% on Friday, turning what would have a been modest weekly gain into a loss and breaking a five-week advance.

"There is still a lot of uncertainty -- trade wars with China, sanctions against Russia, Turkey's currency crisis -- but we always have these kinds of risks in the background," said Karyn Cavanaugh, senior market strategist at Voya Financial.

"In the long run, equities follow earnings and so far the full-year estimate for 2018 is holding up," Cavanaugh said.

The S&P 500 is up about 6% year to date, having risen nearly 10% since the February lows. Much of that advance has been underpinned by stellar earnings growth and a healthy economy, while investors largely chose to shrug off protectionist measures like tariffs.

One of the reasons investors so far have treated trade wars as a distant possibility rather than an immediate threat might have to do how little the existing tariffs impacted profits of large multinational corporations.

In fact, companies with larger global exposure reported higher profit growth than their more domestically oriented counterparts, according John Butters, senior earnings analyst at FactSet.

Cavanaugh noted that there are reasons to remain optimistic about the economy.

"I still think investors are underestimating corporate tax cuts and their full impact on the economy. Companies are spending a lot on capital expenditures, which will improve productivity and future profits," Cavanaugh said.

As to the Turkish currency crisis, Cavanaugh said that it is not likely to have a significant impact on U.S. markets, though there are lots of other risks that can drive volatility higher.

"Before we get to the third-quarter earnings season we would have to deal with mid-term elections, continued trade disputes and other geopolitical news. But even if we end the year at current levels, it's still a good return for investors," Cavanaugh said.

Next week, investors will be able to assess the health of the American consumer.

Retail-sales data are scheduled for Wednesday at 8:30 a.m. Eastern, while some of the largest retailers are also scheduled to report their second-quarter earnings during the week, including Home Depot Inc.(HD) Macy's Inc.(M) and Walmart Inc.(WMT).

Aside from retail sales, investors will learn about productivity, with the report due at 8:30 a.m. and industrial productions, due at 9:15 a.m. on Wednesday.

Also on Wednesday, a housing-market index and business inventories are due at 10 a.m. Data on consumer sentiment is scheduled for Friday at 8:30 a.m.

(END) Dow Jones Newswires

August 12, 2018 19:59 ET (23:59 GMT)