Week ahead: Trying to make sense of economy
As the market starts another month of economic uncertainty, stocks may look to other markets for leadership.
NEW YORK (CNNMoney.com) -- Wall Street will return for the first trading day of a new month Monday with the economic outlook still unclear and the bankruptcy of a major American business icon looming large.
General Motors is expected to file Chapter 11 after its restructuring bid fell short of the government's June 1 deadline. The company's stock fell below $1 for the first time since the Great Depression on Friday.
Still, GM officially going bust may not be the big market mover of the week, since most investors have already factored it in. There's also the economy, which will likely grab the spotlight.
Economic indicators due next week include, among other things, a closely watched manufacturing index on Monday and the all-important government jobs report Friday.
At the same time, investors are nervous about growing turmoil in the bond market and a weakened U.S. dollar.
"The biggest issue facing investors now is trying to make sense of the bond market implications for the economy, as well as what's going on with the dollar," said Gary Flam, a portfolio manager at Bel Air Investment Advisors.
Last week, the yield on the 10-year Treasury note spiked to a 6-month high. The abrupt rise stirred fears that more costly borrowing, particularly mortgage rates, could derail an economic recovery.
The dollar, which fell to a 5-month low Friday, also put investors on edge. However, the greenback's decline has had a silver lining. A weaker dollar helped boost the price for crude oil some 30% in May, which has driven shares of energy producers higher.
Indeed, the rally in energy stocks was one of the main reasons why the major indexes managed to end May in positive territory as optimism about the economy faded.
May marked the first time stocks have risen for three consecutive months since October 2007. But the Dow's 3.8% advance in May was tame compared to the 30% rally on Wall Street during March and April.
Given all of the cross currents in the market, analysts say stocks are likely to remain rangebound until a significant catalyst comes along to provide direction one way or the other.
"Certainly there's money on the sidelines that could be coming into this market," said Quincy Krosby, chief investment strategist at The Hartford. "But investors want to get a clearer picture of the economy."
Monday: Before the opening bell, the government is set to release figures on April personal income and spending. A report on construction spending in April and a closely watched manufacturing index are due out shortly after trading begins.
Troubled automaker General Motors is expected to declare bankruptcy after efforts to restructure before the government's June 1 deadline fell short.
Tuesday: A report on pending home sales comes out at 10 a.m. ET. May auto sales are also on tap. Last month, overall industry sales tumbled 34%.
The technology sector will focus on the annual E3 electronic entertainment expo in Los Angeles.
Wednesday: Economic indicators are forecast to show an increase in service sector activity and a rebound in factory orders.
A report from payroll-processing firm ADP is expected to show private-sector employment shrank by 543,000 jobs in May after a decline of 491,000 jobs the month before.
Homebuilder Toll Brothers (TOLL) is expected to report a quarterly loss of 44 cents per share, according to analysts surveyed by Briefing. com. That compares with a loss of 59 cents in the same period a year ago.
At 10 a.m. ET., Federal Reserve chairman Ben Bernanke will testify before House Budget Committee on the condition of federal budget.
Thursday: Retailers report May chain store sales. The government reports on weekly jobless claims before the opening bell.
The European Central Bank will announce its decision on interest rates.
In the United States, the Federal Reserve kicks off a two day conference on financial markets and monetary policy in Washington.
Friday: The government's closely watched monthly jobs report is due before the market opens. Economists think the nation lost 550,000 jobs in may, an increase of 11,000 from the previous month total. The unemployment rate likely rose to 9.2% from 8.9%.
Another government report is expected to show consumer borrowing fell by $6 billion in May after plunging by a record $11.1 billion the month before. 
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