U.S. stocks may test record highs next week as muted oil prices take center stage. But the September jobs report on Friday could keep traders cautious and upend a rally.

Though the Dow Jones industrial average made a run at its all-time closing high this week, next week may offer the blue-chip stock gauge its chance to close above its record highs, analysts said.

Without much economic data until later in the week, traders will keep watching crude oil prices for clues

about how energy costs will impact consumer spending in the holiday season. On Friday, oil settled below $63 a barrel, off about 20 percent from a NYMEX record of $78.40 in July.

Interestingly enough, all our technical signals are still pointing higher, said Bruce Zaro, chief technical analyst at Delta Global Advisors in Plymouth, Massachusetts. The direction still looks like it is going to be up.

Volume may be light on Monday, with the observance of Yom Kippur, the most somber day on the Jewish calendar.

OFF IN THE OZONE

The Dow Jones industrial average blew past its all- time closing high in intraday trading several times this week. At one point, the Dow came within less than 10 points of its record intraday high of 11,750.28.

But the benchmark average of 30 blue-chip stocks finished at 11,679.07 on Friday, failing to end above its all-time closing high of 11,722.98. That suggested to some traders that the Dow is still testing these levels and has more work to do to break out to new highs.

The advance has been narrow - meaning less and less stocks are participating - so that tends to raise a caution flag, said Barry Ritholtz, fund manager at Ritholtz Capital Partners, in New York.

The Dow has done much better than the broader market, and, historically, when you see people rotate away from small- cap to big-cap, that tends to be a late-stage defensive maneuver by professional investors.

U.S. stocks just finished the best September since 1998, with the S&P 500 index up about 2.5 percent for the month. But some investors may be cautious as they head into October, known as the jinx month, according to the Stock Trader's Almanac, because of stock market crashes in 1929 and 1987.

Despite a modest decline on Friday as traders consolidated quarter-end positions, all three stock indexes finished the week with gains: The Dow rose 1.49 percent, while the Standard & Poor's 500 Index advanced 1.60 percent and the Nasdaq Composite Index shot up 1.78 percent.

For the quarter, the Dow rose 4.74 percent, the S&P 500 jumped 5.17 percent - its biggest third-quarter advance since 1997 - and the Nasdaq climbed 3.97 percent.

For the year so far, the Dow is up 9 percent, while the S&P 500 is up 7 percent and the Nasdaq is up 2.4 percent.

EYES ON OIL AND CONSUMERS

The key right now is what is going to happen to the economy, said Neil Wolfson, president of Wilmington Trust Investment Management in New York. This rally has partially been due to the fact that oil prices have declined, and the view is that it might prevent us from going into recession.

Oil prices will be particularly important next week, Wolfson said, as investors try to assess the strength of the consumer before the key holiday shopping season.

The November-to-December holiday shopping season is the most important period for U.S. retailers, generating anywhere from 25 percent to 40 percent of their annual sales.

As we get close to the earnings season, the market direction will be more based on individual company forecasts and reports, (or) speculation, said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.

We're also getting closer to the beginning of the holiday season and that starts to put a more positive spin on retailers, who undoubtedly will be optimistic.

On the New York Mercantile Exchange, crude oil for November delivery settled on Friday at $62.91 per barrel, up 4 percent for the week.

There have been few pre-announcements about the upcoming earnings season, which kicks off Oct. 10, when Alcoa Inc. reports results. Any confessions about earnings or sales shortfalls could influence investors, who are worried about corporate profits.

The earnings calendar is light next week, but investors will try to glean some information about the consumer from beverage company earnings reports. Pepsi Bottling Group Inc. is due to report earnings on Tuesday and beverage importer Constellation Brands Inc. will give its quarterly report on Thursday.

Hotel chain Marriott International Inc. and contract electronics manufacturer Solectron Corp. also are due to give quarterly results on Thursday.

PAYROLL PRESSURE

Next week's economic data could help investors assess the likely magnitude of the economic slowdown.

On Friday, the Labor Department is due to release its non-farm payrolls report for September. Economists polled by Reuters expect that the U.S. economy added 125,000 jobs in September, compared with 128,000 in August. They are forecasting that the U.S. unemployment rate will remain unchanged at 4.7 percent.

We're at or close to full employment with the unemployment rate being as low as it's been, Wolfson said. But the question is what will happen with wages and wage inflation.

Average hourly earnings are forecast to have gone up 0.3 percent in September, after gaining 0.1 percent in August.

The week's data calendar will kick off on Monday with the Institute for Supply Management's September index of U.S. manufacturing activity. The forecast: 53.5 in September, compared with 54.5 in August.

On Tuesday, domestic car and truck sales will be released, with slight upticks forecast for both. September car sales are pegged at an annual rate of 5.40 million units, while September truck sales are seen at an annual pace of 7.17 million units.

On Wednesday, the ISM's index of U.S. non-manufacturing activity will shed some light on the strength of the services sector. The forecast: 56.0 in September vs. 57.0 in August.

Investors may get a better picture of the manufacturing sector's health on Wednesday, when August factory orders and revised August data on durable goods orders will be released. Investors have been worried about the pace of U.S. manufacturing after conflicting reports on business activity from the Federal Reserve's district banks in Philadelphia, Richmond and Chicago in the last two weeks.

(Wall St Week Ahead runs weekly. Any questions or comments on this column can be e-mailed to emily.chasan(at)reuters.com)

(Additional reporting by Caroline Valetkevitch and Ellis Mnyandu)

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