As contingency plans are made for Greece's possible departure from the eurozone, investors may not get a clear picture until Greece holds elections on June 17. As a result, U.S. economic statistics may grab the spotlight during the holiday-shortened week.

Major releases include consumer confidence, gross domestic product and on Friday the May nonfarm payrolls report, which could provide clues on whether the economy is running out of steam or has simply hit a soft patch.

U.S. financial markets were closed on Monday for the Memorial Day holiday.

Corporate news this week is expected to be light, with the first-quarter earnings season largely in the rear view mirror. Among S&P 500 companies, only government contractor SAIC Inc is scheduled to report this week.

EUROPE STILL A CONCERN

"We are going to continue to worry about Europe no matter what. That is going to be a concern," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

"But with the two main events in Europe not taking place for several weeks, the market will probably concentrate more on the domestic economy and the economic numbers."

But Europe will continue to be closely monitored, with equities affected by any developments in the fiscally troubled region. Increasing worries about the region, coupled with tepid U.S. data, have sent the S&P 500 down more than 5 percent for May.

But stocks rose last week. The Dow Jones industrial average gained 0.7 percent, the Standard & Poor's 500 was up 1.7 percent and the Nasdaq composite index rose 2.1 percent.

As the Greek elections draw closer, headlines from Europe could unsettle investors.

Belgian Deputy Prime Minister Didier Reynders said it would be a "grave professional error" if central banks and companies were not preparing for a Greek exit from the euro zone.

In addition, French banks, which are among the lenders most exposed to Greece, have stepped up their efforts on contingency plans for the debt-laden country leaving the euro zone, sources familiar with the situation said.

JUMPING INTO STOCKS

Any U.S. data this week which points to an economy pulling out of the doldrums could divert attention from Europe and provide investors an incentive to jump into stocks, which have become cheap during the recent pullback.

Analysts have pointed to the 1,275 to 1,280 range for the benchmark S&P index, just below the 200-day moving average, as a key level of support the market is likely to challenge.

"You are looking at 1,277 on the downside. The market will test it, but when it gets there it is going to hold because there is a lot of money on the sideline that needs to be put to work," said Ken Polcari, managing director at ICAP Equities in New York.

"People are using that number as the entry point, so you will find stability at that level."

Another possible silver lining for investors may be the strengthening of the dollar, which has been a safe haven during the euro zone's sovereign debt troubles.

The dollar index is up nearly 5 percent for the month, and some analysts feel it could not only help equities stabilize but spur a move higher.

"With sovereign debt default now a possibility, and some form of dissolution of the euro also possible, the hidden positive may be for the U.S. dollar, and U.S. dollar-denominated assets," said Brad Lipsig, vice president of investments and senior portfolio manager at UBS Financial Services in New York.

"Capital inflows could support U.S. real estate prices, which could help stabilize U.S. banks," he said. "All of this could help support U.S. stock prices during a difficult period for Europe's economy. It's not inconceivable that this dynamic could trigger a rally in the U.S. stock market."