By Wallace Witkowski, MarketWatch

SAN FRANCISCO (MarketWatch) -- Negotiations by U.S. lawmakers on how to avoid the so-called fiscal cliff and a renewed interest in Europe will command the attention of investors in the coming week.

On Monday, Congress returns for a three-week, lame-duck session following the Thanksgiving break, but investors are expecting officials to do more than just run out the clock and hammer out some sort of compromise on how to avoid $500 billion in automatic tax hikes and spending cuts scheduled to take effect come 2013.

A rough start to that process could jeopardize strong gains from the stock market's abbreviated Thanksgiving trading week.

"Given the correction that we had last week after the election, investors are asking, 'Is that it?'" said Marty Leclerc, principal at Barrack Yard Advisors. "We seem to be at a critical juncture in the market."

On Friday, the Dow Jones Industrial Average (DJI) rose 1.4% for its first above-13,000 close since election day on Nov. 6, netting a 3.4% weekly gain; the S&P 500 Index (SPX) advanced 1.3% for its first close above 1,400 since Election Day, for a gain of 3.6% for the week.

The Nasdaq Composite Index (RIXF) gained 1.4% to finish shy of Election Day's above-3,000 close with a gain of 4% for the week. All three indexes are still at a slight loss for the month of November.

Even though a fair amount of economic data is scheduled to come out in the week ahead, anything but the wildly unexpected will likely take a back seat to what goes on in Congress.

"In the absence of the fiscal cliff, we'd be looking at these points," said Mark Luschini, chief investment strategist at Janney Montgomery Scott. "Unless we get a shockingly positive or negative number, it's not going to matter."

On Tuesday comes the release of October durable-goods orders, the September Case-Shiller home price index, November consumer-confidence data and the September Federal Housing Finance Agency home-price index.

The Federal Reserve's Beige Book is released on Wednesday, along with October new-home sales data. On Thursday comes third-quarter GDP revision data and October pending sales for homes. Then, October personal-income and consumer-spending data are released on Friday, along with the Chicago PMI.

More trouble brewing in Europe?

U.S. political negotiations won't be the only focus for investors. On Friday, European Union leaders ended talks without hammering out a long-term budget after many countries rejected spending cuts called for by the United Kingdom and its allies.

"Europe has resurfaced as a bit of a problem, and the U.K. is not being cooperative," according to Luschini.

Also, this week euro-zone finance ministers had failed to agree with the International Monetary Fund on conditions for giving Greece its next installment in bailout money, some 31.5 billion euros, with plans to resume talks on Monday.

In the meantime, a rally in Greek bonds may be jeopardizing a plan to buy back those bonds at a discount from private investors, The Wall Street Journal reported Friday.

Earning-season stragglers

Earnings reports are almost all in, with 487 companies out of the S&P 500 Index having reported quarterly results -- with 64% of companies having beaten Wall Street expectations on the bottom line, and 39% on the top line, according to Thomson Reuters I/B/E/S.

That's compared with an average of 67% and 55%, respectively, over the past four quarters, Thomson said.

S&P 500 companies scheduled to report in the coming week include Analog Devices Inc. (ADI), ADT Corp. , Tiffany & Co. (TIF), Pall Corp. (PLL) and Kroger Co. (KR)

Other companies reporting include Green Mountain Coffee Roasters Inc. (GMCR), PVH Corp. (PVH), Aeropostale Inc. (ARO), American Eagle Outfitters Inc. (AEO), Ann Inc. (ANN), Guess Inc. (GES), TiVo Inc. (TIVO) and Barnes & Noble Inc. (BKS)

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