Jobs, oil, earnings to call tune

By Ellis Mnyandu

NEW YORK (Reuters) - U.S. stock investors will sift through reams of economic reports, including July payrolls and second-quarter gross domestic product, as they search for catalysts next week that could trigger a recovery on Wall Street.

With worries about the impact of the housing slump on the economy and the profit outlook keeping stocks in a bear market, data that points to strong growth will help put investors on firmer footing.

Next week's data will come on the heels of separate reports on Friday showing U.S. consumer sentiment rebounded in July from a 28-year low and business inventories rose unexpectedly last month. Data also revealed that June new-home sales were not as weak as expected, helping to dispel the gloom -- and lift the market.

An added incentive for investors may come from a further drop in the price of oil, now below $124 a barrel -- levels last seen in early June.

But even if next week's economic reports help fuel optimism, there probably will still be plenty of concerns about whether the financial sector has seen the worst of the credit crisis.

The government's plan to bolster the nation's mortgage finance companies Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) brought calm this past week on Wall Street, but a sense of "all clear" still eluded the market.

The main event on the crowded data calendar will come on Friday, when the Labor Department releases July's payrolls report, and the Institute for Supply Management gives its July reading on the manufacturing sector. Domestic car and truck sales for July are also set for release throughout the day.

"Unemployment jumped to 5.5 percent recently, so if we get another tick up and another month of job losses, it will just reinforce the negative long-term loop we're in," said Joseph Battipaglia, market strategist at Stifel Nicolaus in Yardley, Pennsylvania.