Wall Street investment strategists are buckling up for a bumpy ride and keeping a wary eye on Europe, but there are some stock market bulls who expect their forecasts for the U.S. stock market to be vindicated.

Optimism has been strained since late April as U.S. equity indexes have been buffeted by worries that Greece's sovereign debt crisis could spread into much of southern Europe.

In May alone, when Greece became the worry du jour of markets, the Dow Jones industrial average <.DJI> lost roughly 9 percent and the benchmark Standard & Poor's 500 <.SPX> fell 8 percent.

Gina Sanchez, director of equity and asset allocation strategy at Roubini Global Economics, was wary that slower growth in Europe will spill over to the global economy, including the United States.

Our base case is for a slow recovery in Europe, and the risk is for a potential L-shaped recovery or even a double-dip (recession) there, said Sanchez.

The weakening euro will, in turn, weigh on exports by the United States, China and Japan to Europe and likely usher in a year of two halves for U.S. growth, as robust growth in gross domestic product in the first half turns more sour in the second, she said.

RGE analysts believe markets entered a new phase of risk aversion in early May that should continue for now.

Between equities and bonds, we prefer bonds, said Sanchez. Bouts of risk seeking that could flare up in the stock market from here on are likely to be chances for rebalancing.

All told, though, Sanchez said Roubini Global Economics, home to economist Nouriel Roubini -- known as Dr. Doom for his bearish, and prescient, forecasts -- does not see a double-dip recession for the United States.

Jeffrey Rubin, senior markets researcher with Birinyi Associates in Westport, Connecticut, seconded that and recommended that U.S. investors stay exposed at home.

Undeterred by European jitters, he said the firm's favorite investment is U.S. equities.

We're sticking with a 1,325-point target for the S&P 500 for the year-end, Rubin said. That implies a healthy gain from here.

The S&P 500, a broad-based measure of U.S. large-cap stocks, closed up 1.1 percent on Tuesday at 1,062 points, but is still down about 13 percent from its April closing high.

The U.S. economy, to us, is still improving, still in the early stages of recovery, said Rubin. Manufacturing is picking up. Retail sales are picking up.

There are no better indicators than the market itself for taking the economy's pulse, Rubin said.

That includes companies like Coach , Tiffany , Polo Ralph Lauren , Home Depot , Lowe's and Whirlpool , he said -- all stocks that benefit from a revival in discretionary spending.

Coach isn't doing well because of federal stimulus money, he said of the luxury leather-goods maker.

Maria Fiorini Ramirez, president of economic consulting firm Maria Fiorini Ramirez Inc., was more guarded.

The U.S. economy has momentum, she said, but it remains an open question as to which indicators are genuinely good and which are temporary fluff, stirred up by stimulus programs.

Still, companies are through with big layoffs, and hiring is likely to continue, albeit at a modest pace, she said.

Corporate balance sheets are in the best shape they've ever been, which means companies have the financial flexibility to hire once they see a greater need, Ramirez said

For many investors, after years of market volatility, there's an attitude of principal preservation that I don't think is going to change, Ramirez said. But fortune will, as always, favor the brave.

It's hard to buy things when everyone is telling you not to. But that's how the big money is made, she said. You have to be willing to sit through the clobbering.

Brian Lancaster, head of securitized bond strategy for North America at RBS, said the real estate market, so long a drag on the U.S. economy, is near a bottom.

Residential housing prices could still fall another 3 to 5 percent, but the rate of mortgages falling into delinquency has slowed dramatically, he said.

We've got a lot of wood to chop, Lancaster said. But I think the momentum is really significant in the economy.

(Editing by Leslie Adler)