NEW YORK (

TheStreet

) -- August, known for lazy days and vacationing traders, may have a decidedly darker tone in its final five trading sessions after doubts about the economic recovery crept into the market's psyche this past week.

The

S&P 500

closed near the 1070 mark on Friday, and while stocks have jostled for much of the summer months, one market participant couldn't help but note the S&P's wide trading range and its drifting back to levels last seen at the beginning of the summer.

"From a very broad perspective, we got through earnings season after the first quarter at the end of April, and the market had a sharp correction from late April to late May, and we're right where we were at the end of May," said Gary Flam, portfolio manager at Bel Air Investment Advisors. "So, that 'sell in May and go away' adage has really proved true this summer. And I think as we get into September and people refocus again, that's when it'll get a little more interesting."

But recovery fears look very real right now.

Stocks got hit by a wave of disappointing economic news to end the week, sending the major stock market averages tumbling as investors sought shelter from risk. The

Dow Jones Industrial Average

alone shed 1.4% Thursday and another 0.6% Friday, following reports that more

workers applied for unemployment benefits and

factory activity unexpectedly slowed in the East. The Dow ended Friday down a little more than 4% in the past two weeks.

Despite more promising corporate earnings news and headlines showing a pick-up in M&A activity, market observers will be focused intently on any new signs of an economic slowdown in the week ahead. Evidence of deterioration could put pressure on

Federal Reserve

officials to go beyond their marginal quantitative easing plans, observers say. Thus, investors will pay close attention to comments from central bankers next week. Fed chairman Ben Bernanke, for one, is scheduled to speak at the Kansas City Fed's annual symposium in Jackson Hole, Wyo. being held Aug. 26-28.

"We think the Fed kind of missed a chance here in August to do a big policy move. They did announce a kind of mini-quantitative easing, but now I think the drumbeat is building for them to do another massive quantitative easing," said John Canally, economist at LPL Financial. "The Fed's kind of gotta start hinting that they're going to do more, or I think the market is going to be even more disappointed."

Two of next week's reports stand out.

"Initial claims and GDP are going to be the big main ones that people are going to look at and may have the most impact," said Doug Roberts, chief investment strategist at Channel Capital Research.

And expected sluggish trading volumes only set the stage for more combustible action during the week. "The retail investor is not participating, and a lot of the institutional hedge fund guys are down at the beach, so what you have is low volumes," Roberts said. "What you have left are these program traders or just event traders, and that causes outsized reactions."

Friday will bring the government's second read on the pace of economic growth during the second quarter, which has been slower than the first quarter. While the first iteration of the Commerce Department's report on

gross domestic product showed the economy growing at a modest 2.4% annual pace, many Wall Street economists expect that figure to be revised sharply lower to 1.4%, according to consensus projections provided by

Briefing.com

.

And given the continuing labor market fragility, no macroeconomic indicator may have more sway than the Labor Department's weekly initial jobless claims report, which is due before Thursday's opening bell. New applications rose to 500,000 in the latest report, a psychologically resonant level last seen back in November. While everyone knows the job market remains tepid, another increasing weekly tally would be tough to take.

"If that continues toward the weaker trend, people are going to really start ratcheting down their forecasts for employment growth for August, and that might spook the market," Canally said.

Bel Air's Flam said he expects home sales data to get more attention, more so than initial claims and the GDP, since he believes labor market trends for the month appear to be set and the impact of the slowing GDP is largely being felt. July existing-home sales are due out Tuesday from the National Association of Realtors and are expected to drop to a seasonally adjusted annual pace of 5.14 million units from 5.37 million in June. A report on new-home sales from the Commerce Department, due Wednesday morning, is expected to show a modest pickup to a 338,000 unit annual rate last month from 330,000 units in June.

Homebuilder

Toll Brothers

(TOL) - Get Report

will also report its quarterly results on Wednesday morning.

Rounding out the week will be July's durable goods orders and the Energy Information Administration's weekly crude inventory figures on Wednesday and a final take on the University of Michigan's consumer sentiment reading on Friday.

Though earnings will remain light in the coming week, a few names will get attention, mostly consumer-focused companies.

Barnes & Noble

(BKS) - Get Report

, which has been in the middle of a proxy fight and takeover speculation of late, is expected to report a steep loss on Tuesday. Wall Street expects the book retailer to lose 80 cents a share in the first quarter, according to

Briefing.com

, compared to earnings of 14 cents a share in the same period last year.

Other results due out next week include

Big Lots

(BIG) - Get Report

and

Burger King

(BKC)

on Tuesday, women's retailer

Coldwater Creek

(CWTR)

and

Guess?

(GES) - Get Report

on Wednesday,

J. Crew

( JCG) and software maker

Novell

( NOVL) on Thursday, along with

Tiffany & Co.

(TIF) - Get Report

on Friday.

-- Written by Sung Moss in New York