Factory, service sector and employment data expected

The first week of the third quarter probably will be a quiet one as many fund managers, having put the final touches on their portfolios last week, leave on their Fourth of July vacations.

But a few key snapshots of the economy -- notably the Institute for Supply Management’s manufacturing and service sector indexes and the Labor Department’s job report -- could provide Wall Street with some direction.

Today, the ISM’s June manufacturing index is expected to come in at 55.5, according to the median estimate of economists surveyed Friday by Thomson Financial, indicating slightly stronger expansion than May’s reading of 55.0. The ISM’s index of the service sector in June will come out Thursday and is expected to slip to 58.0 from 59.7 in May.

The market hopes the reports show the economy is still rebounding from its first-quarter slowdown. However, any signs that inflation is accelerating -- such as a high reading on the prices paid index -- could cause investors to worry about a possible rate hike.

On Thursday, the Federal Reserve said that although recent data have shown that inflation was moderating, a trend has not been established, so policymakers want to see further signs that costs are under control.

On Friday, Wall Street expects the Labor Department to report that unemployment held steady at 4.5% in June and that nonfarm payrolls rose by 130,000, a smaller rise than May’s gain of 157,000.

The job market has been one of the stronger areas of the economy this year, so if the figures widely miss forecasts, concerns could arise that growth might not pull off the recovery that so many economists are predicting.

Last week, the Dow Jones industrials rose 0.4%, the Standard & Poor’s 500 index rose 0.1% and the Nasdaq composite index rose 0.6%.

This week will also feature the Commerce Department’s report today on May factory orders -- which the market expects to show a 0.3% decline, compared with a 0.3% rise in April -- and automakers’ June sales, which will be released Tuesday.

The markets will be closed Wednesday for the Fourth of July holiday.

There are no major earnings reports this week, but investors will be keeping an eye out for any profit warnings ahead of the second-quarter earnings season, which begins in earnest the third week of July.

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At a glance

Today

Institute for Supply Management issues its report on

activity in the manufacturing economy.

Mark Lay, head of a money management firm that lost $215 million in an investment

on behalf of the Ohio Bureau of Workers’ Compensation,

is set to be arraigned on

a fraud charge.

Tuesday

Commerce Department reports on factory orders for May.

Automakers release their sales figures for June.

Wednesday

U.S. markets closed for the Fourth of July holiday.

Criminal trial expected to begin in Nigeria against Pfizer Inc.

Nigerian authorities accuse

the U.S. drug company of

conducting experiments that led to deaths and disabilities among children more than a decade ago.

Thursday

Institute for Supply

Management issues its report on activity in the non-manufacturing economy for June.

Labor Department reports on weekly jobless claims.

Mortgage company Freddie Mac reports on interest rates.

Friday

Labor Department reports on employment for June.

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From Times Staff and Wire Reports