For the first time in a while, traders could have a little spring in their step when they come into work on Monday. The May

jobs report on Friday was not the horror some had feared. The yield on the long bond held below 6%. The

S&P 500

futures managed to get through a level where sellers had persistently knocked it down. Stocks broke their up-down-up-down pattern.

But while investors may not be as dour in the coming week as they have been, the mood remains cautious. To get a handle on what things look like going forward, it's worthwhile to look back on the jobs report and the way the market reacted to it.

First, the stock market took a far more sanguine view of the report than the bond market did. Purely anecdotally, it seemed as if stock traders focused in on the jobs data -- only 11,000 jobs were added in May against the 216,000 that economists expected. A typical view around the corner of Wall Street and Broad was that the jobs news would allow the

Fed

to hold off for now.

Bond traders, however, saw the jobs news as more mixed than good. A drop in the unemployment rate and a greater-than-expected increase in wages made the report more of a wash than a tremendous case for the bulls.

"There's the same amount of pressure on the Fed as there was prior to the number," said Mike Cloherty, senior market economist at

Credit Suisse First Boston

. "And given the chorus of more hawkish statements coming out of

FOMC

members, I think they are going to move."

What the jobs number may have done is opened the door for the Fed to be persuaded not to hike just yet. Or, if that view is a bit too Pollyannaish for your tastes, it's opened the door for the Fed not to hike all that much. If May

retail sales

figures come in well on Friday, if the

TheStreet Recommends

Consumer Price Index

comes back in the week after the coming one, perhaps Uncle Al will spare the rod. But if those things don't come in benignly, when he speaks before Congress'

Joint Economic Committee

June 17, "the guy with the glasses may knock the market over the head and say, 'Hey boys and girls, we're going to raise rates when we next meet,'" said Mitchell Held, economist at

Salomon Smith Barney

.

And yes, Held tends to think that retail sales will be strong, the CPI will not be particularly weak, and that there's a good chance the Fed will hike rates by 0.25% when it meets June 29 and 30.

Now, the simple logic on Wall Street goes like this: "Rate hike bad" (say this like the sheep in

Animal Farm

). In an environment where lots of people think rates are going higher, things are a bit more complicated. At this point, the bond market is already pricing in a hike and, with the recent declines, it looks like the stock market is, too. "The critical thing will be to determine how many moves will be in this cycle," said Cloherty. "How far will the Fed go?"

Until 1997, people would always tell you that for the Fed, rate hikes were like potato chips -- they could never have just one. But then the Fed

did

tighten just once -- and while that had a lot to do with an outside event (Asia), in this age where market policy is more open and the Fed is using finer instruments (the tightening bias, for example), the old axiom may not hold.

"We think this is it for now," said Held of the quarter-point hike he expects, if not at the June meeting, within the next three months. And he points out that it's unclear if this should even be considered a tightening so much as the taking away of a cut that the Fed made when markets were in crisis.

But while it seems that the market's downside may be limited in the coming week, making any headway before the FOMC meeting seems like it will be tough as well. Add to that that companies will begin heading to the confessional booth next week -- the season of warning if your earnings are not up to snuff is upon us. Unfortunately, when companies warn, they tend to suggest that their problems are industry-wide, even when they are not, and whole sectors can suffer.

Remember, too, that June usually isn't such a barn-burner month for the stock market. And that stocks have traveled awfully far this year, despite the recent falls. "We still have to do more work to digest the incredible rally we had from October's lows to April's highs," said Courtney Smith, chief investment officer at

Orbitex Management

. "It's going to take a little while for some more value to get into this market. Let's go sideways for a while."