Market Preview: Cashing Out

Updated from 6:00 p.m. ET to include additional information about the after-hours session.

NEW YORK (TheStreet) -- It's really starting to feel like things could go either way for the stock market in the coming months.

On the one hand, the economic data has been showing some cracks, most recently with a second straight disappointing initial jobless claims report, existing home sales for March coming in well short of consensus, and a not-so-robust Philly Fed read on manufacturing. That feeds right into the repeat of 2011 scenario that many investors fear.

At the same time, first-quarter earnings season has been largely better than expected so far, and Wall Street has shown a bit more patience with Spain than it previously did with Greece. The feeling remains that global economic growth will hold steady with China in glide mode and the United States doing its part.

Which issues Wall Street gives the most credence changes on a daily basis, but the bias seems to be growing more negative. After a spectacular calendar first quarter, the Dow Jones Industrial Average is down 1.9% this month; the S&P 500 has given back 2.2%; and the Nasdaq is off 2.7%.

A recent survey of fund managers by Bank of America Merrill Lynch showed that even the pros are getting nervous about how things are going to shake out. That reticence manifested itself in a big move into cash earlier this month with the poll finding a net 24% of asset allocators described themselves as overweight cash vs. just 6% in March. Average cash balances jumped 4.7%, the survey found.

Much of that cash appears to have come out of stocks with a net 26% of asset allocators overweight equities in April, down from 33% in March, B of A said.

Eurozone concerns have risen along with the stacks of cash crowding the sidelines. The poll, which was conducted from April 5-12 and included 256 participants with a total of more than $700 billion in assets under management, found that 54% of those surveyed picked European sovereign debt funding as the "number one tail risk" for the market, up from 38% in March; and that 63% of those polled believe Spain is likely to provide a "negative surprise" in 2012, up from 50% last month.

"Investors have moved to a more neutral position after positive shifts in sentiment and risk taking in the first quarter. We believe investors will retain a sense of caution throughout the second quarter," said Michael Hartnett, chief Global Equity strategist at BofA Merrill Lynch Global Research, in a statement.