Stocks eye jobs, other data in July 4th week

By Ellis Mnyandu
NEW YORK (Reuters) - For stock investors, June`s job report could be a make-or-break factor next week in determining whether the recent rally has legs or not.
The monthly non-farm payrolls data will come out on Thursday, instead of the usual Friday. U.S. markets will be closed on Friday, July 3rd, for the long Fourth of July, or Independence Day, holiday weekend.
Investors will pick apart the job figures and reams of other economic data released during this four-day week to assess if recent signs of stabilization point to a sustainable economic recovery. Consumer confidence, the Institute for Supply Management`s June index on U.S. manufacturing activity, and domestic car sales are among the major indicators on tap.
Although the U.S. economy has been mired in a recession since December 2007, investors` optimism has increased since early March amid growing signs that the extent of the economic slump is moderating.
That optimism has provided a crucial underpinning to stocks since the Standard & Poor`s 500 Index .SPX hit a 12-year closing low on March 9. This spring, the S&P 500 climbed as much as 40 percent from that low; at Friday`s close, it was still up 35.8 percent.
While unpleasant surprises may trigger a long-awaited correction, analysts said evidence of further economic stabilization would make the bulls grow bolder and help stocks break out of their recent consolidation range.
"It is going to depend a lot on where the surprise is," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois, referring to the non-farm payrolls data.
"In the last report, people looked at the fact that the decline in payrolls was not nearly as large as expected, but the unemployment rate jumped tremendously. At the end of the day, that jump trumped things."
JOBLESS RATE NEAR 10 PERCENT
U.S. non-farm payrolls are forecast to lose 355,000 jobs in June versus May`s slide of 345,000, according to economists polled by Reuters.
The U.S. unemployment rate is projected to jump to 9.6 percent in June from 9.4 percent in May.
"We think that a spike in the rate of unemployment could actually be a positive, as it may signal that discouraged workers are coming in from the sidelines and starting to look for work again," said Phil Orlando, chief equity market strategist at Federated Investors in New York.
"There may be something else that plays out next week, a sort of portfolio window dressing effect. There`s still a ton of cash sitting on the sidelines right now."
At Friday`s close, the three major U.S. stock indexes finished the week mixed. The blue-chip Dow Jones industrial average .DJI slipped 1.2 percent, while the S&P 500 dipped 0.3 percent, and the Nasdaq .IXIC gained 0.6 percent.
Holiday-shortened weeks tend to be volatile.  Continued...
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