Memorial Day marks the unofficial beginning of summer, but baseball and barbecues may have to take a back seat to Fed watching for a while longer for investors who remain preoccupied with the timing of the Federal Reserve's next rate increase.
The nonfarm payrolls report, a closely watched barometer of growth, is likely to provide an important clue given the increasingly hawkish tone of Fed officials with even Chairwoman Janet Yellen embracing the possibility of higher rates.
"Strong jobs data is a sign that the economy is doing better and that the chance of a rate hike is increasing," said Karyn Cavanaugh, senior market strategist at Voya Financial.
That said, economists surveyed by MarketWatch are projecting the economy to have created 158,000 new jobs in May, slightly below the 160,000 reported in April. The Labor Department will release May jobs data on Friday morning.
"We think May payrolls could be weak and if we're right, this would likely spark concern about the domestic outlook and foil the Fed's hopes for a midyear hike," Paul Mortimer-Lee, chief economist for North America at BNP Paribas, said in a note.
Mortimer-Lee expects payrolls to come in around 110,000 in May.
"The Fed thinks first quarter's growth setback was just temporary; payrolls as low as our forecast would seriously challenge that view," he said.
The U.S. economy grew at an 0.8% annualized pace in the first quarter, slowing from a 1.4% expansion in the fourth quarter.
Consumer spending and core inflation data, both due on Tuesday, could also move the stock market if they point to building inflationary pressure, something the Fed won't be able to ignore.