Short but noisy week ahead for stocks

If nothing else, the past week offered plenty of drama -- if not entertainment -- for investors as June had a surprisingly strong finish.

The week ahead will have its own dramatic moments, even as U.S. markets take a daylong break on Wednesday for the July 4 holiday. They will also close early on Tuesday.

Everything will build up to the jobs-and-unemploymen​t report on Friday, which most economists believe won't be much to get excited about. There's the Institute for Supply Management's June report on manufacturing on Monday and auto manufacturers' reports on sales for the month on Tuesday. 

While there are few earnings reports that can really move markets on the schedule, there is still Europe to worry about. Stocks shot up Friday largely because eurozone leaders said they were crafting a new plan to save their banking system and start to get their debt crisis under control. The coming week will bring the hard questions on how the plan will work. There will be lots of skepticism because so many plans were immediately found wanting.

Among the big questions that will be asked is if the Europeans can craft a plan fast enough to minimize the slowdown that is gaining strength by the day. Shares of Ford Motor (F) and Nike (NKE) fell on Friday after both said the slowdown in Europe is hurting their businesses.

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The U.S. market looked like it might fall off a cliff after a narrow majority on the Supreme Court upheld President Obama's health care law, but the hint of a European deal brought stocks back late Thursday and the announcement of a deal on Friday set off a big rally.

The Dow Jones industrials ($INDU) finished up 278 points for the day, and the blue chips ended the week with a 1.9% gain, and a 3.9% gain for June, its biggest monthly increase since October and its best June since 1999.

The Standard & Poor's 500 Index ($INX) rose 4% for the month -- also its best June since 1999 and its best month since October. The Nasdaq Composite Index ($COMPX) added 3.8% for month, its best since February and its best June since 2000.

For the year, the Dow is up 5.4%, after a 2.5% loss in the second quarter. The S&P 500's gain at midyear is 8.3% after falling back 3.3% in the quarter, and the Nasdaq is sporting a relatively gaudy 12.7% for the year despite a 5.1% decline in the second quarter.

At the same time, crude oil (-CL) in New York fell 1.8% in June to $84.96 a barrel and was off 17.5% for the quarter. The national average price of gasoline has fallen to $3.353 a gallon from a high of $3.936 a gallon in April. The price fell 7.4% in June and 14.6% in the quarter.

The cost of a 20-gallon fill-up has fallen from $78.72 to $67.06. That's a savings of $11.66. If you live in, say, Los Angeles, the savings are real.

There are lots of head winds for the market for the rest of the year. The biggest are Europe and the so-called fiscal cliff. Plus, profit growth for the second quarter is expected to slide.

Europe will be a big issue because the chatter about the debt crisis has morphed into a probable regionwide recession that is affecting businesses elsewhere. Like Ford, Nike and others.

The fiscal cliff that the federal government faces -- if not dealt with with care and a spirit of compromise -- could cause huge and abrupt spending cuts that would probably send the domestic economy into something that feels like a recession. The cliff is so-called because a combination of expiring Bush tax cuts and required spending cuts could hit at the end of the year.

Industries that have been stalwarts in the recovery -- energy and automobiles -- may be about to stop growing. Drilling-rig counts are falling because of low natural gas prices in particular but falling oil prices as well.

One reality that seems to be emerging: Profit growth is slowing. Thomson Reuters says negative preannouncements are ahead of positive preannouncements by 3.6-to-1. That's the weakest showing since the third quarter of 2001.

Markets for the week
			6/29/2012			6/15/2012			% chg.			YTD chg.
Dow Industrials			12,880.09			12,640.78			1.89%			5.42%
S&P 500			1,362.16			1,335.02			2.03%			8.31%
Nasdaq			2,935.05			2,892.42			1.47%			12.66%
Russell 2000			798.49			775.16			3.01%			7.77%
Crude oil			$84.96			$79.76			6.52%			-14.03%
(per barrel)			0.00			0.00			0.00%			0.00%
U.S. Dollar Index			81.75			82.44			-0.84%			1.53%
10-yr. Treasury			1.66%			1.67%			-0.78%			-11.33%
Gold			$1,604.20			1,566.90			2.38%			2.39%

Here's what the week ahead looks like:

The ISM Manufacturing report, due Monday: Look for a slide to a reading of about 50. That will reflect the cool-down that hit the economy this spring.

Construction spending, due Monday from the Commerce Department. Expect a small gain, largely because of apartment construction. Government spending will fall for the sixth straight month.

Auto and truck sales, due Tuesday. The expectation is for continued strength, although sales haven't been as strong as earlier this year. The consensus on auto sales is a seasonally adjusted annual rate of 13.9 million units, up slightly from May. Watch for a negative surprise. There have been anecdotal reports of slowing sales since Memorial Day. Truck sales may decline because of slowing in the oil patch.

ISM Non-Manufacturing Index, due Thursday. The last index reading came in at 53.7. Look for something closer to 53. Europe is the problem.

Jobless claims, due Thursday. Look for 385,000 new claims for the week ended June 30, the same as the week of June 23.

Payrolls and unemployment, due Friday from the Labor Department. The consensus estimate is for a gain of 90,000 jobs in June, but there are many people who see 75,000 or less. Private-sector growth is stalling; public sector jobs are slumping. The unemployment rate should hold at 8.2%.