Europe, economic outlook to take center stage on Wall St

Investors say big gains will be hard to come by amid signs of slowing growth and economic headwinds from the euro zone.

The S&P 500 posted its second-biggest daily decline of the year this week. Trading is likely to be volatile in the final week of the quarter as headlines from Europe drive sentiment.

The market also is awaiting a US Supreme Court ruling on the Obama administration's healthcare overhaul, and there are certain to be winners and losers in the healthcare sector, depending on how the justices decide.

European Union leaders will begin a two-day meeting on long-term plans for fiscal and banking union on Thursday.

Italian Prime Minister Mario Monti said the euro zone countries faced "escalating speculative attacks" unless a lasting solution to Europe's financial crisis is found at the summit.

Spain's bond yields have been steadily rising, and investors urged a faster pace by European leaders toward greater fiscal union and helping the peripheral economies.

"We're starting to run up against Spain and Italy having trouble financing - Spain for sure," said John Mauldin, president of Millennium Wave Investments, an investment advisory firm in Dallas. "Europe is up against that moment when it has to do something."

David Joy, who helps oversee $571 billion as chief market strategist at Ameriprise Financial in Boston, said the overseas issues "are things over which we have no control ... makes this time particularly challenging."

For the week, the Dow lost 0.9% and the S&P 500 fell 0.6%. But the Nasdaq was up 0.7%.

Despite the S&P 500's weekly loss, signs of market resilience exist. The CBOE Volatility index, a measure of investor anxiety, has fallen for the past three weeks, dropping about 30%. The S&P 500 is up 1.5% so far this month.

The problems in Europe have been largely telegraphed, somewhat explaining the market's ability to bounce back, said Ted Weisberg, a trader with Seaport Securities who works on the floor of the New York Stock Exchange.

The market "has been somewhat discounting them," Weisberg said.

HEALTH CARE RULING LOOMS

The U.S. Supreme Court is expected to rule on the Affordable Care Act, the healthcare overhaul passed by Congress in 2010 that has faced a number of court challenges.

For health insurance companies and hospitals there are several different scenarios for the impact of the ruling. Some on Wall Street have devised complex strategies - betting on one sector against another - depending on how the ruling comes out.

Stocks of health insurers that specialize in Medicaid programs for the poor, like Centene Corp or Molina Healthcare Inc , could be hit if the law is struck down. Large insurers like Aetna Inc