NEW YORK (Reuters) - Investors will likely look for evidence the...

NEW YORK (Reuters) - Investors will likely look for evidence the U.S. housing slump may be over and for signs of moderating inflation this week before deciding whether the rally in U.S. stocks since mid-March is over.

The steepest one-day drop in U.S. stocks in two months last Thursday gave investors pause, but signs of slowing retail sales and slowing inflation on Friday encouraged a return of confidence.

"On a short-term basis, the market is very vulnerable to a normal 3 percent, 5 percent correction," said Al Goldman, chief market strategist at A.G. Edwards in St. Louis. "I would think we would probably have a normal pause to refresh coming up."

But when or what might spark a pullback is impossible to predict, he added.

The Dow Jones industrial average (.DJI: Quote, Profile, Research and the Standard & Poor's 500 Index (.SPX: Quote, Profile, Research both rose for a sixth straight week, with the Dow setting new all-time closing and intraday highs.

But the other major gauge of U.S. equity performance, the Nasdaq Composite Index (.IXIC: Quote, Profile, Research, fell for the first time in six weeks.

For the week, the Dow rose 0.46 percent to 13,326.22, the S&P gained 0.02 percent to 1,505.85 and the Nasdaq fell 0.38 percent to 2,562.22.

A record-setting climb over the past two months, during which the Dow gained more than 10 percent and the S&P more than 9.6 percent, was a little too fast but indicative of the stock market's strength, A.G. Edwards' Goldman said. Up to May 7, the Dow rose 24 of 27 trading sessions, matching an 80-year-old record.