Jobs growth, Fed take center stage next week

NEW YORK (MarketWatch) � U.S. stock investors are likely to focus on jobs, the consumer and central bankers next week, with more tepid readings on the economy raising expectations for extra Federal Reserve stimulus.

A heavy week of data releases, culminating in Friday�s July jobs report, as well as meetings by the Fed, European Central Bank and Bank of England will likely overshadow earnings reports.

Click to Play U.S. next week: Fed, jobs, cars

Investors are likely to turn from a focus on earnings to the Federal Reserve's next rate meeting, July auto and retail sales and the July labor report. (Photo: Bloomberg)

More than half of S&P 500 SPX �companies, including Apple Inc. AAPL , Bank of America Corp. BAC � and Caterpillar Inc. CAT already have reported the latest quarter�s results.

Although 71% of large-cap U.S. stocks have reported earnings above the mean estimate, the blended growth rate for the index is currently at 3.3% � the lowest growth in 11 consecutive quarters, according to a FactSet analysis.

�On the whole it hasn�t been a bad season, given all the macro challenges, but some of the companies gave really weak forward guidance and they were punished [in the markets] for that,� said John Praveen, chief investment strategist at Prudential International.

Some of those strains on corporate growth may be showing up in sluggish jobs growth.

In June, the United States created 80,000 jobs, the third straight month of job growth of under 100,000. Economists polled by MarketWatch are expecting a break with that trend, with payrolls expanding by 110,000 in July.

With federal spending cuts and higher taxes due to kick in next year, plus the ongoing debt crisis in Europe, analysts worry that businesses have little incentive to hire.

Click to Play Europe next week: ECB, HSBC

Investors will be out for hints of further quantitative easing from both the FOMC minutes and the ECB news conference. A busy earnings week includes figures from HSBC, RBS and Fiat.

�There�s a great deal of uncertainty over what happens as we get into the second half of the year � there�s the �Europe fatigue�, anxiety about U.S. elections and the fiscal cliff,� Praveen added.

Europe vied with corporate news to sway sentiment in the latest week. Comments from policy makers including ECB President Mario Draghi on preserving the euro zone temporarily calmed fears about runaway Spanish borrowing costs, helping stocks into a late-week rally.

The Dow Jones Industrial Average DJIA �rose nearly 2% for the week, its third weekly gain, and recrossed 13,000 for the first time since early May. The S&P 500 Index SPX �gained 1.7% for the week, also the third weekly gain. The Nasdaq Composite Index COMP �rose 1.1%. See Friday�s Market Snapshot.

Consumer, Fed

Monday is light on both earnings and economic data, giving investors an extra day to digest Friday�s gross domestic product report, which underscored lingering sluggishness in consumption. The U.S. economy grew 1.5% in the second quarter. Read more on GDP.

�What was also interesting in the GDP numbers was that we clearly saw slower consumer spending but higher inventory numbers,� said Cam Albright, director of asset allocation at Wilmington Trust Investment Advisors. �The shelves are being stocked, but they�re not getting emptied.�