After a decidedly bad week for stocks, all eyes will be on the raft of economic data due out next week as the second-quarter earnings season approaches. Trading, however, is likely to be subdued ahead of the Independence Day holiday.

Monday is the last day of the second quarter and the last chance money managers have to dress up their portfolios, so it could be volatile. But with few earnings releases planned and Thursday's session ending early, many trading desks will be short-staffed as traders get a jump-start on the long weekend.

"Not only do you have the July Fourth holiday, but we close up at 1 p.m. on Thursday. Who is going to be here once Wednesday rolls around?" said Larry Wachtel, senior vice president at Prudential Securities. "We do get jobs figures, and those are always important. The question is whether nonfarm payrolls will recede slightly or stay flat."

"The whole week will be colored by the holidays, since we have no earnings statements, but the PMI Chicago Purchasing Managers Index on Monday is important, too. You might see the PMI rise above 50, which is the divide between contraction and expansion," said Wachtel. "And with the portfolio changes, volume could be high for a Monday, but then it will slack off on Tuesday."

Tuesday brings the release of the Institute for Supply Management index for June, which is expected to come in at 50.5, up from May's 49.4 and a marginal sign of economic expansion. Tuesday also brings auto and truck sales for the month of June, which could affect the automakers.

Thursday's session could be volatile given the expected low volume, especially if there are surprises in the early morning release of nonfarm payrolls, average workweek, hourly earnings and the unemployment rate for the month of June. And with factory orders for May and ISM services due out shortly after the opening bell on Thursday, market watchers will have a number of data points to sort through before vacation begins.

Economists are expecting decent news on Thursday, with nonfarm payrolls dropping by just 5,000, better than the fall of 17,000 seen in May. The unemployment rate, a lagging indicator of the employment picture, is expected to creep up to 6.2% from 6.1%, while the ISM services index is expected to rise to 55 from 54.5 in May.

"It's going to be a short week with some important numbers," said Sean Martin, head trader at A. Gary Shilling. "It should be a fairly positive week, but you'll see some volatility because of the economic numbers and the fact that bond yields are so much higher here."

Indeed, last week's story was the simultaneous stumble of both the broader market averages and the Treasury market in the wake of the Fed's comments of continued economic weakness. After ending above 9200 a week ago, the Dow Jones Industrial Average closed Friday's session at 8989.05, off 211.70 points for the week. Likewise, the Nasdaq fell 19.44 points, ending the week at 1625.28, while the S&P fell 19.49 points for the week, ending at 976.20.

Treasuries were also weaker, pushing the yield on the 10-year bond up more than 40 basis points in the last two weeks. On July 13, the yield on the 10-year was at 3.10%, a half-century low, but since that time, the bond market rally has stalled, pushing the yield up to 3.54%, where it ended Friday's session.

The end result of slumping shares and the change to the tax laws surrounding dividends is that shares with dividends are looking more attractive these days. Gary Shilling's Martin thinks many traders could be looking to snap up those stocks on weakness in the coming weeks, especially if the long-awaited market pullback becomes a reality.

"Everyone is looking for a correction in the market in order to get long," said Martin. "They're looking at money market and bond yields and seeing dividend stocks and saying that they look pretty good."

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