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It was a bumpy May for stocks.
The S&P 500 eked out a gain of nearly 1% for the month, though sell-offs in high tech and growth names made for a volatile stretch.
Nick Colas, co-founder of DataTrek Research, says it all comes down to earnings.
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"The funny thing about this year is that we've seen more earnings revisions than we've seen stock price performance," Colas told CNBC's "ETF Edge" on Monday. "We've seen 12% upside to earnings expectations this year … It's going to come down to Q2 and Q3 earnings."
Analysts surveyed by FactSet currently expect second-quarter S&P 500 earnings to rise by roughly 60% off a depressed pandemic quarter this time last year. The big banks will kick off the season when they report mid-July.
"The numbers are still too low, it seems to us, for Q2, so, we should have another strong earnings season coming up, but that will be kind of a tug-of-war until then," said Colas.
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Prepare for more volatility until that second-quarter earnings season in mid-July gives markets direction, he adds.
"Expect a couple more weeks of exactly what you've just seen and then, as earnings begin to show themselves through, another leg higher towards the end of the year," he said.
Any progress towards an infrastructure bill should also give investor sentiment a boost, according to Jay Jacobs, senior vice president and head of research and strategy at Global X ETFs. His firm's PAVE infrastructure development ETF launched during the 2016 Presidential election cycle, and now he sees even more appetite for activity in that area.
"It's very much kind of ripe for disruption, if you will, with an economy that's still below prime GDP," Jacobs said during the same interview. "Investors are very excited about the prospects of probably the largest infrastructure bill we have ever had in the United States and a fund that's really designed to own the winners of that type of bill – construction engineering companies, commodities, transportation companies and heavy machinery companies that are going to be building that infrastructure."
The path forward for an infrastructure bill is still unclear. Senate Majority Leader Chuck Schumer said Friday that Democrats would work with or without Republicans on a plan in June. The two parties are split on the overall cost of a proposal.