After five straight weeks of losses, investors will watch how the Federal Reserve responds to a spate of bleak economic data for an indication of what comes next.
The regular meeting of the Organization of the Petroleum Exporting Countries (OPEC) will also be closely observed next week, as Middle Eastern turmoil creates a complicated set of considerations as the nations decide whether to raise oil production.
"It's hard to deny that the growth rate of the economy is slowing, maybe significantly," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co.
Data due next week, including reports on jobless claims, consumer credit and the Beige Book report on the regional economy, are likely to confirm that trend, Bittles said.
The market closed lower Friday june 3 2011, on a disappointing non-farm payrolls report that added to some investors' concerns the economic recovery has ground to a halt. The US economy added only 54,000 jobs in May, far short of estimates of 125,000 new jobs. Unemployment rose to 9.1 percent, the highest rate since December.
The Dow Jones Industrial Average fell 290 points this week, or 2.3 percent, to 12,151.26. It was the benchmark's fifth straight weekly decline, its longest losing streak since 2004. So far this year, however, it is up almost five percent.
The Nasdaq Composite fell 64 points this week, or 2.3 percent, to close at 2,732.78. It has fallen for the third week in a row and four of the last five weeks. Year-to-date, it is up three percent.
"Markets have to have a cautious approach right now," said Baird's Bittles. "The market has doubled since 2009, so it's not as if stocks are cheap here. And earnings expectations have been extremely high, while the economy's slowing, and that means something has to give. I suspect that earnings expectations will be revised downward."
The earnings calendar is fairly light next week. Only four S&P 500 companies are scheduled to report results, including Pall Corp., a maker of filtration equipment; food products stalwart J.M. Smucker Co.; National Semiconductor Corp. and distilled spirits maker Brown-Forman Corp.
However, some tech companies' stocks may move on product updates.
On Monday, Apple Inc. will begin its worldwide developers conference, with a keynote featuring Chief Executive Steve Jobs, who has been on medical leave for most of the year.
Plus, video game publishers and device makers, including Electronic Arts Inc., Activision Blizzard Inc., Nintendo Co. Ltd. and Sony Corp. will give investors and gamers a look at their new offerings at the E3 trade show next week.
The economy and the Fed may have the broadest pull over the stock market, however.
The winding down of the Fed's latest monetary stimulus program - known as the second round of quantitative easing, or QE2 - has been an additional drag on stocks in recent weeks. Investors are unsure whether stocks, commodities and other assets that have posted big gains thanks to cheap borrowing costs can keep rallying once the Fed starts to remove a program that kept rates low.
Fed Chairman Ben Bernanke's speech on Tuesday will likely be a focus for investors trying to glean indications of whether the Fed could roll out a new stimulus program to jump start a recently lagging economy. Several other Fed officials also speak next week For the latest updates PRESS CTR + D or visit Stock Market news Today
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