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Greece crisis could overshadow jobs, Fed

Greece crisis could overshadow jobs, Fed

This coming holiday week was supposed to be all about the June jobs report and what it means for the Federal Reserve’s interest rate hike plans. But the messy Greece debt talks could rile markets, too. Wall Street will be looking for answers to two key questions this week. The first is, “Will they or won’t they?” More specifically, will more strong economic data — ranging from fresh readings on jobs to housing and manufacturing — force the Fed’s hand and put a September rate hike back on the table?_47737308_greece

The second is, “Deal or no deal?” In short, how will the Greek debt saga play out? Will the endgame be bullish or bearish for markets? Will Athens seal an eleventh-hour deal with its eurozone creditors by the time markets open Monday and be able to pay the $1.8 billion it owes the International Monetary Fund by Tuesday’s deadline? Markets will likely be on edge when trading resumes Monday, as the Greek debt saga will likely drag into the new week regardless of this weekend’s make-or-break meeting between Athens and the institutions it owes money to. Tuesday’s deadline will be tough for Greece to meet even if a deal does get done, as it must still be approved by its parliament, which leaves little time.

While Greece is front and center in the news, the Fed story is a big one, too. Record low interest rates have been a key driver of the stock market bull run, and signs of coming rate hikes could also rattle investors. With economic data in the U.S. picking up in recent weeks and rebounding from a weak, weather-impacted first-quarter, Wall Street will be sure to dissect Thursday’s jobs report and other data for its potential impact on coming rate hikes, says Quincy Krosby, market strategist at Prudential Financial.

“This coming week, the package of economic releases covers a broad range of the economy, but for the markets, the data focused on employment takes the spotlight, especially as investors try and ascertain when the first rate hike, or ‘liftoff,’ takes place,” Krosby said. “A strong employment report, especially if hourly wages move higher, will bolster the case for a rate hike in 2015, possibly even in September. This could put the market in its ‘good news is bad news’ mood, although a stronger economy ultimately bodes well for the market.” Wall Street is forecasting that the U.S. economy created 230,000 new jobs in June, after 280,000 jobs were created in May. The unemployment rate is expected to tick down to 5.4%, from 5.5%. It’s still unclear whether Greece news will trump U.S. economic news, says Mark Luschini, chief investment strategist for Janney.