LOS ANGELES -- Calling the first quarter a surprise for Wall Street would be putting it mildly. And that has raised the stakes for the second quarter that kicked off Monday.


Defying the majority view at the end of 1994, the U.S. economy appeared to slow in the first three months of this year, bond yields fell and stocks boomed -- even though the dollar crumbled against the Japanese yen and the German mark.


If U.S. investors feel good about their gains this year, however, they're also likely to feel jittery about what comes next.


After all, the first quarter's 9 percent price gain in the Standard & Poor's 500 index of blue-chip stocks, to record highs, is the kind of return many investors would expect to make in a year.


And while most barometers of the economy suggest that a slowdown occurred in the first quarter, there's no guarantee that consumer spending and business activity won't resurge this spring or summer -- which could resurrect worries of higher inflation and higher interest rates.


Trying to predict market moves is usually a fool's game, of course. But investors and speculators can at least make educated guesses about the near future if trying to fine-tune their portfolios.


As the second quarter begins, here are some of the key issues Wall Street is focused on:


?Can corporate earnings stay hot in a cooling economy? With many stocks at or near record highs after the first quarter, investors will need assurance that underlying corporate earnings growth remains robust enough to support share prices.


So far this year, Wall Street seems to have concentrated on the benefits of an economic "soft landing" -- lower interest rates and modest inflation -- without asking much about the potential downside of slower earnings growth.


Yet analysts remain surprisingly upbeat about first-quarter profits, which companies will begin to report in earnest starting next week.


Earnings-tracker Zacks Investment Research in Chicago say analysts' estimates call for corporate profits overall to be up nearly 21 percent in the first quarter versus a year ago, excluding special charges.


Moreover, some money managers believe that the industries most vulnerable to disappointing earnings in a weaker economy -- auto and steel firms, for example, have already seen their stocks trashed.


"I think a lot of the earnings worries have been discounted," says Jerry Dodson, manager of the Parnassus Fund in San Francisco.


So if sellers take control of the market in the first few weeks of April, Dodson and other bulls say, it could provide a good buying opportunity for investors who stay focused on earnings growth.


?Can inflation stay low? Despite the U.S. economy's hot pace last year, inflation remained tamed. Last Friday, when the government revised annualized fourth-quarter gross domestic product growth up to 5.1 percent from the previous estimate of 4.6 percent, it didn't change the estimated 2.6 percent annualized rise in a key inflation index for the quarter.


The message seemed to be: Thanks in part to continued productivity gains, the United States' economy can grow briskly without pushing prices up much. First-quarter inflation data said much the same.


Yet Wall Street's nagging fear is that there is pent-up inflation in the pipeline, and that it will spill out in the second quarter, even if economic growth continues to moderate. That would assuredly force the Federal Reserve Board to raise short-term interest rates again, and probably push long-term rates up as well.


Some economists believe that the biggest inflation threat is in wage growth. If businesses continue to hire at the brisk pace of the last several months, labor could get scarcer (relatively speaking) and wages could rise faster than the Fed would like to see.


That's why this Friday's government report on March employment may be crucial for stock and bond markets. "For inflation truly to remain tranquil, the labor market must cool down," said John Williams, economist at Bankers Trust in New York. He expects a weak March jobs report, which in theory could provide stocks and bonds with another reason to rally.


?Will the dollar begin to matter? Wall Street decided in the first quarter that the sliding dollar is a crisis for everyone else -- but not for America.


Yet on Friday, the dollar went into another free fall against the Deutsche mark and the Japanese yen, ostensibly because the Bank of Japan refused to cut its official bank lending rate (now a mere 1.75 percent) to lessen the attraction of yen-denominated securities.


While few Wall Streeters would welcome a dollar meltdown, some say it's important to remember that the dollar's weakness is largely a mark and yen issue.


The dollar may come to matter more to markets, some pros say, when and if it begins to strengthen again. Bulls expect that a turn in the dollar would bring foreign investors rushing into U.S. stocks and bonds.