U.S. stocks hinge on jobs, GM and the consumer

SAN FRANCISCO (MarketWatch) -- The state of the U.S. job market will come into sharp relief over the next week, starting with lay-offs connected to General Motors Corp.'s likely bankruptcy and ending with the government's May jobs report.

In between, markets will absorb testimony from Federal Reserve Chairman Ben Bernanke, car sales for May, quarterly results from homebuilders and moves in benchmark U.S. bonds.

Stock investors are likely to lump all these varied data points into two piles: one that supports the idea that the U.S. economy has already started to recover, and one that says this recovery will take longer and incur more pain than prices for stocks, oil and some currencies reflect.

U.S. week ahead: GM bankruptcy looms

The week is likely to start off with the widely expected bankruptcy of General Motors. Jobs will be in focus later in the week, with the ADP data on Wednesday and the payrolls number Friday.

"Up until the middle of May, less-bad data fueled the rally. What we need to see is some good data starting to come out," said Brad Sorensen, director for market and sector analysis at Charles Schwab.

Traders are likely to start off the week with the news that GM /quotes/comstock/13*!gm/quotes/nls/gm (GM 0.75, -0.37, -33.04%) has filed for bankruptcy after the 101-year-old company and a recent big creditor -- the U.S. government -- look to the legal system to restructure the auto maker's heavy liabilities.

With such an action floated by the Obama administration for weeks, the broader market has had plenty of time to factor in the major ramifications of a filing.

Tens of thousands more workers will likely seek first-time jobless claims, potentially halting a recovery in this leading indicator of job growth.

But the U.S. government's financial support for GM and its suppliers has quelled fears that a Ch. 11 reorganization filing could cause the entire sector to collapse.

"The market is anticipating they'll continue to build cars, make cars -- that's already priced in," Sorensen said.

Stocks in the week ahead will be coming off a month of healthy gains, even though the rally that started in March stumbled in recent weeks.

In May, the S&P 500 index /quotes/comstock/10u!spx.x (SPX 919.14, +12.31, +1.36%) gained 5.3%, the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (INDU 8,500, +96.53, +1.15%) rose 4% and the Nasdaq Composite /quotes/comstock/10y!i:comp (COMP 1,759, +22.54, +1.30%) advanced 3.3%.