As investors and traders return for the first full week of the year, they will be closely watching data on the service sector due today and unemployment figures due Friday.
President Bush is expected to unveil an economic stimulus package Tuesday that could include tax cuts on stock dividends.
But uncertainty about an expected U.S.-led military action in Iraq, confrontation between the United States and North Korea over nuclear arms and the political upheaval in Venezuela will be hanging over the market.
This week, investors are expecting trading volume to improve, with institutions returning to full staffing levels after the last two trading weeks were split in half by the Christmas and New Year's holidays.
Last week, the Institute for Supply Management's manufacturing index was well above expectations and spurred a rally Thursday.
But the report left many analysts questioning whether the numbers reflected real strength in the economy or just an aberration.
They may get answers this week when the institute's report on the service sector is released today. If it mirrors the strong manufacturing data, markets could get off to a good start.
As for Friday's release of December unemployment figures, the jobless rate is expected to remain at an eight-year high of 6%.
On Thursday, retailers will report their sales at stores open at least a year for a holiday shopping season that is expected to provide the lowest gains in decades.
Other reports this week:
Today, the Commerce Department is expected to report that November factory orders declined 0.6%.
Wednesday, the Federal Reserve is expected to report that consumer credit increased in November.
Thursday, the Commerce Department will report a 0.2% increase in November wholesale inventories.