Most investors are pining for a return to normalcy after a series of gut-wrenching revelations, so a holiday-shortened week might be just the medicine.

After the meltdown at

WorldCom

(WCOME)

and the near-meltdown at

Xerox

(XRX) - Get Report

, Wall Street is hoping for a breather during the Fourth of July week, which is typically marked by low volume.

"Apart from the technical rallies we've had last week, the psychology is still gloom and doom," said Jim Volk, a trader at D.A. Davidson. "I would expect the market to back off a bit next week and be quiet."

On the other hand, economists are optimistic about key manufacturing and jobs data to be released. They will likely be another indication that the economy is on a different track than corporate America and the stock market.

"These days, economists feel better about things than portfolio managers do," said Volk.

Moving Outward

A consensus of economists expects the Institute for Supply Management's manufacturing index to tick up to 55.8 in June from 55.7 a month ago. Any reading above 50 is consistent with expansion.

Separately, economists forecast payroll growth of 94,000 in June, compared with 40,000 in May. The unemployment rate is predicted to nudge up to 5.9% from 5.8%, still an historically low level.

"I am hoping to see a breakthrough in the jobs report," said Joel Naroff, head of Naroff Economic Advisors, an independent consulting firm. "We are at a point where the negative trend is behind us." According to Naroff, the economy may have added as many as 150,000 to 200,000 jobs in June.

After months of not hiring, anecdotal evidence suggests that companies have started nibbling at expansion. "Placement firms have told me that businesses are starting to come to them," said Naroff.

More From Less

Productivity, which the

Federal Reserve

last week said was robust, has continued to grow. "Despite all the layoff announcements, businesses have had to hire to meet demand," said Sung Won Sohn, an economist at Wells Fargo. "We are still near the bottom, but the outlook is improving."

Others note improvement in the weekly jobless claims data. "The number of people filing initial jobless claims has fallen to a 15-month low," said Brian Jones, an economist at Salomon Smith Barney.

Still, many investors are waiting for clarity on corporate profitability to make decisions. "We're waiting for second-quarter earnings," said Volk. "And then for forecasts on the third quarter."

Among the few firms reporting next week are medical device manufacturer

Biomet

(BMET)

, handheld gadget maker

Research In Motion

(RIMM)

and trucking company

Roadway Express

(ROAD) - Get Report

.

On a positive note, some experts think the market will be able to withstand another accounting mess.

"Most of the selling has been done," said Tom Schrader, a trader at Legg Mason. "The Street is starting to become numb to corporate troubles. Xerox was down hard Friday, but the rest of the market was OK."