TORONTO (CP) -- Investors should brace themselves for another week of volatility on stock markets caused by a variety of cross currents, including higher oil prices, mixed earnings and worries about whether fighting in the Middle East will spread.

It was a depressing week for most North American indexes last week even as the earnings picture was generally good and investors felt more confident that the U.S. Federal Reserve was ready to call a halt to raising interest rates.

"I think there's still a lot of uncertainty plaguing investors," said Julie Brough, assistant vice-president at Morgan, Meighen and Associates. "I think there's a lot of people that need to be convinced that things are still good and there's people that need to be convinced that things might be bad."

Blue-chip heavyweights IBM, J. P. Morgan Chase and Canadian National Railway along with tech giants Microsoft and Google were among the companies handing in strong second-quarter earnings reports during the week.

"You've had some warnings, had some misses, but the fact is that you're still getting a nice balance of upside surprises that's above average," said Johnston.

But investors are finding it hard to get happy because of worries about the second half of this year.

"I think that the consensus is too optimistic on earnings - more so for the second half of this year," said John Johnston, chief strategist The Harbour Group at RBC Dominion Securities, pointing to the accumulative effect of more than two years of interest rate hikes in the United States. "After you raise U.S. interest rates by 425 basis points, maybe 450 basis points, earnings are not going to continue to grow at double digits."

In fact, disappointment over earnings later in the year could spark another downleg on markets.

Markets were unable to build on some good news on the interest rate front last week after Federal Reserve chairman Ben Bernanke observed that the U.S. economy is slowing, which in turn should alleviate inflationary pressures.

Markets still believe there is a strong chance the central bank will raise rates again by a quarter point next month and Johnston believes that should be the end of the tightening cycle for the time being.

"So there is minimal interest rate uncertainty in North America," he said, noting that the Bank of Canada has also signaled it is done with rate hikes for now.

Fighting in the Middle East is also adding its own level of uncertainty, which has mainly been reflected in volatility in oil and gold prices.

In Canada, May retail sales figures are out Monday - economists expect that they increased 0.1 per cent during the month.