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NEW YORK (CNN/Money) -
The waiting is the hardest part.
After a brutal April, in which worries about a slowdown in the economy, higher inflation and interest rates sent stocks reeling, the week ahead will be critical.
The Federal Reserve holds its next monetary policy meeting Tuesday, and Friday brings the monthly employment report. April reports are also due on manufacturing, construction spending, truck and auto sales and retail sales.
Plus 11 percent of the S&P 500 will be reporting earnings, including Qwest, MCI, Pixar and (CNN/Money parent) Time Warner.
Additionally, Intel, Qualcomm, Micron and others will be holding analyst meetings later in the week, and such events often yield relevant forward-looking comments.
But really, "it's all about the Fed next week," said Peter Cardillo, director of research at S.W. Bach & Co. "The market will be treading water ahead of that."
All eyes on Greenspan
The Federal Reserve Board, meeting Tuesday, is widely expected to boost interest rates for the eighth time by a quarter-percentage point. That would leave the Fed funds rate, an overnight bank lending rate, at 3 percent.
What's more up in the air is whether the central bank will change the language in its statement to reflect the recent weak spate of economic reports, or alternately, signs of inflation.
Recent reports -- most notably last week's weaker read on first-quarter gross domestic product growth -- have sparked concerns that the economy is slowing down. At the same time, inflation still appears to be on the rise, reviving worries about the threat of "stagflation."
This has led some Fed watchers to speculate that the central bank may remove the word "measured" from its statement, in reference to the pace at which it will raise interest rates.
However, others argue that it is too soon to say the economy is slowing down.
"There is speculation that the last month's data show the potential for an economic slowdown and that the Fed may indicate that," said Paul Mendelsohn, chief investment strategist at Windham Financial Services. "But I don't think so. The economy is still healthy."
(For a detailed preview of the Fed meeting, click here.)
Mendelsohn said that the Institute for Supply Management (ISM) read on manufacturing, due Monday, will also be important in light of recent signs of weakness in regional manufacturing reports.
At the end of the week, the focus turns to employment, with the monthly payrolls report due.
Earnings are also on tap, but so far have not had a big impact on investor sentiment. First-quarter earnings are currently tracking to have risen 13.6 percent in the quarter; that's a blended number, including both reported earnings and forecasts.
The growth is slower than in recent quarters -- when earnings jumped more than 20 percent year-over-year -- but nonetheless remains strong.
However, "the market has already discounted first-quarter earnings, and maybe even second," Mendelsohn added. "The greater concern is about the economy going forward."
Key events in the week ahead
- The ISM releases its April manufacturing index Monday -- it's expected to have fallen to 55 in April from 55.2 in March, according to a consensus of economists surveyed by Briefing.com.
- Factory orders for March, due Tuesday, are expected to have fallen 1.2 percent in the month, after rising 0.2 percent in February.
- The ISM's read on the services sector of the economy, due Wednesday, is expected to have fallen to 61.0 in April from 63.1 in March.
- Productivity in the first-quarter is expected to have grown at a 1.8 percent annual rate, according to a preliminary read due Thursday. Productivity grew at a 2.1 percent annual rate in the fourth quarter.
- Employers are expected to have added 173,000 to their payrolls in April, when the monthly report is released Friday, after adding 110,000 in March. The unemployment rate, generated by a separate survey, is expected to hold steady at 5.2 percent, unchanged from March.
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