RPT-Wall St Week Ahead: Stocks need positive data for lift

(Repeating column initially transmitted late on Friday)

By Chuck Mikolajczak

NEW YORK, May 24 (Reuters) - Wall Street may feel more pressure in this holiday-shortened week unless a raft of economic data, including consumer confidence, home sales and GDP, restores the optimism that had driven a two-month rally before it faded in the past few days.

Investors cited the potential bankruptcy of General Motors GM.N as a concern for the markets, as further job losses could imperil the U.S. economy. Such an event, even though it is anticipated, would not help sentiment, which is already subdued after the major U.S. stock indexes fell on Thursday and Friday due to worries about the U.S. budget deficit.

GM is facing a June 1 deadline to work out its issues with creditors if it wants to avoid a bankruptcy filing. On Friday, a spokesman for some of GM's creditors said the biggest bondholders of roughly $27 billion in debt plan to reject GM's current offer for a 10 percent equity stake. For details, [ID:nN22369035]

"That's the biggest risk for the market here," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont. "We are going to lose a lot of jobs as it is, with closing of dealerships both from Chrysler and GM.

"A (GM) bankruptcy throws everything into chaos."

Deutsche Bank analyst Joseph LaVorgna has forecast that a General Motors bankruptcy could lop four percentage points off of U.S. gross domestic product.

Since the markets peaked on May 8, stocks have given back some of their gains over doubts about the speed of the economic recovery. U.S. stocks were higher through most of the session Friday, but sagged at the end of the day as investors sought to reduce positions heading into the three-day Memorial Day holiday weekend.