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US markets brace for Q2 earnings

The major US share indexes gained over the week to Friday as investors awaited the release of a key job-market report in the coming week and braced for the looming second-quarter earnings season.

Stocks also ended the week on a stronger note a day after the Federal Reserve opted to keep US short-term interest rates pegged firmly at 5.25 percent, where they have been anchored for a year.

The Dow Jones Industrial Average gained 0.36 percent in the week to Friday to close up at 13,408.62.

The broad-market Standard & Poor's 500 rose a slight 0.05 percent to 1,503.35 and the tech-rich NASDAQ composite increased 0.55 percent to end the week at 2,603.23.

Traders said they were preparing for the pending week's economic news as well as monthly sales updates from the big auto manufacturers, including industry giants General Motors and Ford.

The coming week will, however, be foreshortened by the July 4th holiday on Wednesday when the US takes a break to celebrate Independence Day, one of the biggest US holidays of the year.

The markets were buffeted in the past week by concerns about mortgage-related securities after new reports showed the housing sector still mired in a downturn, partly as a glut of homes for sale swamps the market.

The week's major news event, the Fed meeting, was closely followed, but did not yield any surprises as the central bank left its fed funds rate unchanged and signalled it was still focused on warding off potential inflationary risks.

The Fed also voiced confidence that economic momentum looked more rosy than during the first quarter when economic growth cooled to a 0.7 percent annualized clip.

Recent inflation jitters have been stoked by rising prices, especially for energy.

The coming week will yield fresh snapshots on May factory orders and the job picture for last month. The job report, which excludes farm workers, is closely tracked by Wall Street to see which industries are either hiring or firing staff.

"Next week a lot of June numbers are due and that's going to be the key, with of course the employment report on Friday," said Marc Pado, a market analyst at Cantor Fitzgerald.

"In terms of moving the market, it probably is the most important data of the week," Pado said.

Most analysts expect the job report to show that US nonfarm payrolls moderated to 120,000 positions in June from 157,000 jobs in the prior month.

The nation's unemployment rate is forecast to remain steady at 4.5 percent and hourly earnings are anticipated to show a 0.3 percent rise.

Other market observers said investors were likely to be tracking the share movements of big Wall Street investment banks after Bear Stearns moved earlier this month to bail out two hedge funds it managed which suffered shortfalls in mortgage-related securities bets.

"The last couple of days, we have seen some stability reaching the credit market, helped by the Fed's commentary on inflation and today's numbers, which is helping equities," said Michael Malone, a trading analyst at SG Cowen.

"We are moving toward the second quarter earnings season and I think the expectations are slightly conservative at the moment," Malone said, as corporate America gears up to release its latest profit reports.
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