Coming Week: Job Jitters

Economists are expecting the Labor Department to report that the U.S. economy added 70,000 new jobs to nonfarm payrolls during the final month of the year, a modest gain that would probably lag population growth, but hardly indicates a recession. They're also forecasting an uptick in the unemployment rate to 4.8% from 4.7%.

A disappointment would likely spark a selloff in the stock market, and investors will be looking for an early read on which way things will go on Thursday when the ADP employment report is released, along with a monthly job-cuts tally from outplacement firm Challenger Gray & Christmas and the weekly count of initial claims from the government.

If Friday's report is stronger than expected, investors will still have to curb their enthusiasm, because that could mean the Federal Reserve will be less likely to ease interest rates in the months ahead. In December, the Fed disappointed Wall Street with a quarter-point cut to its fed funds rate target, while investors were clamoring for a half-point reduction.

In its statement that accompanied the announcement, the Federal Open Market Committee cited lingering inflation concerns as a factor in its decision. Investors stand to gain more insight into the FOMC's thinking when it releases the minutes from its December meeting on Wednesday.

Last week, the Dow Jones Industrial Average fell 0.6%, and the S&P 500 lost 0.4%. The Nasdaq gave back 0.7%. For 2007, the Dow is up about 7%, the S&P 500 has gained 4%, and the Nasdaq is up 10%.