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Monthly US jobs report due on Thursday in

holiday-shortened week

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Deadlines for tariffs, fiscal bill also in focus

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Bets rising on Fed rate cuts over next year

By Lewis Krauskopf

NEW YORK, June 27 (Reuters) - Investors who have been

captivated by recent geopolitical events are poised to shift

their attention in the coming week to key economic data and

looming policy deadlines to see if the torrid rally in U.S.

stocks extends higher.

The tech-heavy Nasdaq 100 tallied a record high this

week while the benchmark S&P 500 moved to the cusp of an

all-time peak. Easing tensions in the Middle East paved the way

for the latest bump higher in stocks, as a conflict between

Israel and Iran appeared to calm after missile strikes between

the two nations had set the world on edge.

Focus will shift to Washington in the coming week. President

Donald Trump wants his fellow Republicans to pass a sweeping

tax-cut and spending bill by July 4, while developments between

the United States and trading partners are poised to capture

headlines with Trump's "Liberation Day" tariffs set to take

effect the following week.

Investors also get a crucial view into the U.S. economy with

the monthly employment report due on Thursday. U.S. stock

markets are closed on Friday, July 4, for the U.S. Independence

Day holiday.

Citigroup's U.S. economic surprise index has been

weakening, indicating that data has been missing Wall Street

expectations, said Matthew Miskin, co-chief investment

strategist at Manulife John Hancock Investments.

"After some softer May data, the June data is really going

to be under a microscope," Miskin said. "If the data

deteriorates more, it may get the market's attention."

U.S. employment is expected to have climbed by 129,000 jobs

in June, according to a Reuters poll -- a modest slowdown from

May's 139,000 increase.

Data on Thursday showed the number of Americans filing new

applications for jobless benefits fell in the prior week, but

the unemployment rate could rise in June as more laid off people

struggle to find work.

"The labor market right now is front and center over the

next few weeks," said Brent Schutte, chief investment officer at

Northwestern Mutual Wealth Management.

Employment data could factor into expectations for when the

Federal Reserve will next cut interest rates, with investors

also watching to see if inflation is calming enough to allow for

lower rates. Fed Chair Jerome Powell has been wary that higher

tariffs could begin raising inflation, a view he told the U.S.

Congress this week, although some Fed officials have talked

about a stronger case for cuts and Fed fund futures trading in

the past week indicated ramped-up bets for more easing this

year.

The level of tariffs will come into sharper view with a July

9 deadline for higher levies on a broad set of countries. Stocks

have rebounded sharply since plunging in April following Trump's

"Liberation Day" tariff announcement, as the president pulled

back on some of the most severe tariffs and fears about a

recession eased, but markets could remain sensitive to any

developments.

Investors also will focus on the U.S. fiscal bill in

Congress for indication of the extent of stimulus in the

legislation and how much it could widen federal deficits.

With a roller-coaster first half nearly complete, the S&P

500 is up more than 4% so far in 2025. Recent history has shown

July has been a strong month for stocks, with the S&P 500

increasing 2.9% in July on average over the past 15 years,

Wedbush analysts noted in a report this week.

Also around the corner is the kick-off of second-quarter

U.S. corporate earnings season in the coming weeks, with

concerns over how much tariffs may be biting into company

profits or affecting consumer spending. S&P 500 earnings are

expected to have climbed 5.7% in the second quarter from a year

earlier, according to LSEG IBES data.

"We've been in a geopolitically focused market over the past

several weeks," said Josh Jamner, senior investment strategy

analyst at ClearBridge Investments. "I think the dawn of

earnings season ... will refocus the market back towards

fundamentals."