NEW YORK (CNNMoney.com) -- The stock market's recent hurrah looks to continue early next week, but it could be a jittery celebration, as investors prepare for the monthly payrolls report and the next Federal Reserve policy meeting.

Stocks should be able to sustain last week's positive momentum in the week ahead, with another round of upbeat earnings expected, said Jonathan Golub, U.S. equity strategist at JP Morgan Asset Management.

However, investors are apt to be distracted ahead of the Friday jobs report, Golub added, as it is the last key piece of economic news before the Aug. 8 Federal Reserve policy setting meeting.

Many analysts believe that what the Federal Reserve does and says at that meeting will determine the direction of the stock market over the next few months.

"The market seems to have found a floor last week on bets that we're near the end of the interest rate increases," said Peter Dunay, investment strategist at Leeb Capital.

After 17 straight rate hikes, the Fed funds rate, a key overnight bank lending rate, stands at 5.25 percent, up from a more than 40-year low of 1 percent in the middle of 2004.

If next week's economic reports come in below estimates, that would reinforce the idea that the more than two-year old interest rate hiking campaign is nearly done, Dunay said. But if the economic news is too bullish, that would spark worries that the Fed has further to go. And that's not what investors want to hear.

Expectations that the Federal Reserve will take a breather at the August meeting heated up last week after a pair of economic reports seemed to confirm that growth is slowing.

Granted, investors already know that a slowdown is coming: Fed policy makers have implied as much and recent reads on retail sales and the housing market have added to the bets. Yet, the point was really driven home last week by the one-two punch of Thursday's weak "beige book" read on the economy and Friday's weak second-quarter GDP growth report.

Those reports gave a huge boost to stocks, helping the Dow industrials score one of its best weeks in more than a year. Why? Because investors figure if the economy is truly slowing down, the central bank can take a breather.

Currently, traders are betting there's a less than 30 percent chance of the central bank boosting rates again at the August meeting, according to fed funds futures on the Chicago Board of Trade. Expectations were about 54 percent Thursday afternoon, ahead of the release of the "beige book."

All of which puts a lot of expectations on next week's jobs report.

"With GDP weaker, and with all else being equal, it looks at the moment like the Fed could pause at the August meeting," said Golub. "But if there's a big payrolls number Friday, that could tip the scales."

Economists surveyed by Briefing.com currently expect employers to have added around 145,000 to their payrolls in August, up from 121,000 in July. The unemployment rate, generated by a separate survey, is expected to hold steady at 4.6 percent.

Yet, the jobs report is not all that stock investors will be watching next week for clues about the Fed. They'll also be watching the reports that speak to inflation, including the personal income and spending reports on Tuesday.

Higher inflation is probably a bigger worry for Fed-focused investors than strong economic growth, Dunay said.

That's because GDP growth in the second quarter fell to a 2.5 percent annualized rate, down from 5.6 percent in the first quarter. So there's some wiggle room for the economy to rebound a bit this quarter without it impacting rate hikes.

Yet, the GDP report's main inflation component - the core PCE reading - rose at a 2.9 percent rate, up from 2.1 percent in the first quarter and matching economists' expectations.

That suggests that "inflation is already at the higher end of the band," Dunay said, so reports that show an increase in inflation would be particularly unnerving for a Fed-obsessed stock market.

The week ahead also brings a smattering of high-profile earnings reports, including Verizon Communications (Charts), Procter & Gamble (Charts) and CNNMoney parent Time Warner (Charts). (see graphic for details).

However, with roughly two-thirds of the S&P 500 having reported results so far, the second-quarter earnings trend is already pretty well established. Earnings have been impressive yet again, with Thomson Financial forecasting a 12th consecutive quarter of year-over-year growth of at least 10 percent.

GDP growth slows

Caution: slowdown ahead

Energy leads 2Q earnings growth, again