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With little else to divert it, the market will spend the next four sessions waiting for the fifth, when the government unveils its employment report for July. Stock and bond traders alike hope to divine the near-term direction of the economy from the data, which follow an anemic report on gross domestic product growth in the second quarter.

July's number is particularly important because of the paltry number of jobs added in the prior month. The consensus is that payrolls grew by about 250,000, while the whisper number is lower, at 230,000. In June, the economy added 112,000 jobs, well below the consensus forecast for 250,000, while April and May were revised lower as well.

Another miss -- combined with scattered signs of a slowing economy throughout July and the somewhat weak corporate guidance issued in second-quarter earnings reports -- would be bad news for stocks, said Robert Pavlik, portfolio manager at OakTree Asset Management.

The market is already worried that the economy is moderating because of last Friday's soft GDP report. The government said U.S. GDP grew at a 3% annual pace in the second quarter, well below the 3.7% growth rate economists had projected. Results were hurt in part by weak consumer spending.

The employment report is also significant in its political implications, noted Daniel Morgan, senior portfolio manager at Synovus Investment Advisors. A strong addition of new jobs should bolster the Bush administration's re-election prospects, while weakening Democratic presidential nominee John Kerry's ability to argue that the economy is stagnating.

And the employment report could also affect how quickly


Chairman Alan Greenspan decides to lift interest rates, said Pavlik. The

Federal Open Market Committee

meets on Aug. 10.

"Friday's employment report will give us something to think about as we head into the Fed meeting," he said. "If the report is below expectations, people will be wondering what will the Fed do."

But Morgan thinks Greenspan and the Fed governors have probably already decided if they will or will not raise interest rates at the next meeting. "Alan Greenspan has already made up his mind what direction the employment number will take. I don't think he's going to wait until Friday to make the final decision," he said.

The market already expects another 25- to 50-basis-point increase in short-term interest rates -- if not on Aug. 10, then at the next FOMC meeting on Sept. 21. Morgan argued that the question of when the increases come isn't hugely significant, seeing as a short-term interest rate of 2% is generally expected by year-end. The rate currently stands at 1.25%.

"That's the target number by the end of the year," Morgan said. "How

Greenspan gets there is up to him."

Meanwhile, the broader indices made decent gains in the just-completed week, although each remains below their 2004 starting point. The

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gained 1.8% on the week, ending a five-week losing streak. The

S&P 500

added 1.4%, ending a six-week downturn, and the


was up 2.1%, after dropping four weeks in a row.

"It's fairly evident that institutional investors are not willing to go on a buying spree at this time, and who can blame them, with the Fed hawkish, oil prices hitting new highs and company guidance on the spotty side?" said David Rosenberg, chief North American economist at Merrill Lynch, in a Friday research note.

Pavlik expects the market to stay within a narrow trading range for the rest of the month. "If we do hold within a pretty narrow trading range ... it will bring the buying back as the month of August winds down."

A few other economic reports earlier in the week will give the market something to chew on as it awaits Friday's employment report. Monday's report on July manufacturing from the Institute for Supply Management (ISM) is expected to rise slightly, to a reading of 62 from the prior month's reading of 61.1.

Personal income and consumption for June will be released on Tuesday. Economists expect a rise of 0.3% in the former, which would be on top of the prior month's 0.6% increase. But spending in the month is forecast to be flat.

The ISM's report on the non-manufacturing sector on Wednesday is also expected to show expansion with a reading of 61.5 in July from June's reading of 59.9.

A few key earnings report will be released next week. On Monday, there's

Procter & Gamble

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Martha Stewart Living Omnimedia



Tenet Healthcare

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report on Tuesday.

Hartford Financial Services

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release earnings on Wednesday, while on Thursday

Bar Laboratories




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will report.