Investors Look to Fed, November Jobs, Holiday Sales

November's employment report is expected to show a steady and solid pace of hiring, but it may be the words of Fed officials starting Monday that get more focus in the week ahead. That's because investors have been debating which side of the Fed's dual mandate will influence it more when it considers raising interest rates.

Traders are looking for clarification of whether the labor side would trigger a Fed rate hike, as the unemployment rate continues to improve. Or would it be that sluggish inflation and fears of deflation are a strong enough deterrent to keep the Fed on hold longer.

Related: 5-Year-Low Oil Price Plunge Adds Pressure on Putin

The plunge in oil prices—off more than 13 percent in just the last week—has spurred more concerns about weak inflation, as has sluggish growth in Europe and a slower economy in China. West Texas Intermediate crude lost more than percent after OPEC held off on production cuts Thursday, battling low prices instead with more low prices.

While the economy continues to add jobs, there are few signs of wage pressures and inflation is running well below the Fed's 2 percent target. Many economists expect the Fed to increase short term rates for the first time in mid-2015, but market expectations are for a hike in September, and some Fed watchers even target a year from now.

"A lot of people in the bond market think this pushes out a rate hike," said Daniel Greenhaus, global market strategist at BTIG. "There's the alternative way of thinking about it. The economy has had a pretty good run here. Job growth is doing OK…To the extent the Fed looks through spikes in inflation because of oil prices, it should probably look through a drop in inflation due to oil, in which case they remain on track."

There are a half dozen appearances by Fed officials in the coming week. Two very influential officials, New York Fed President William Dudley and Fed Vice Stanley Fischer, speak Monday at separate events.

Related: This Is Where the Real Fracking Money Is

Friday's jobs report is expected to show the creation of 228,000 jobs in November, and an unemployment rate of 5.8 percent, according to Thomson Reuters. Traders are focused on the level of unemployment since the Fed once targeted 6.5 percent as a level to consider rate hikes.

Besides the jobs report Friday, there is the Fed's beige book on the economy Wednesday, and ISM manufacturing Monday and ISM nonmanufacturing Wednesday.

"I think there's potential for whipsaw just because of the nature of the calendar. You've got both hawks and doves speaking next week but all on different days. You've got the beige book, which is the starting gun for shifting the market focus to the FOMC meeting on (Dec.) 16 and 17," said Ward McCarthy, chief financial economist at Jefferies.

McCarthy expects to see 235,000 payrolls added in November, up from October's 214,000. "I think next week's employment numbers will be pretty solid," he said. "The Fed keeps making real headway meeting the employment objective of the dual mandate. Inflation is still a long way from meeting Fed goals. Income and consumption data was kind of mushy (Wednesday). In terms of how to look at this data, it suggests Q4 is getting off to a slower start but you're getting some momentum from Q3."

Related: With a $4.5 Trillion Balance Sheet, What's Next for the Fed?

Stocks were higher in the past week, while yields moved lower. The 10-year note yield fell to 2.17 percent Friday as European yields also slumped. Stocks continued to climb even with a major routing in the energy sector. At one point Friday, 40 percent of the S&P energy sector was trading at new 52-week lows.

"The sector is 8 to 9 percent of the S&P 500 in terms of weighting, and in terms of earnings it's 11 or 12 percent. It's a decent size, but it's not like a financials or consumer discretionary," Greenhaus said. "Energy and oil itself has fallen and the market has gone modestly higher. Recent history tells you that while it is important, it is not as of yet sufficient to drag down the entire market."

"Where it goes from here, no one knows. OPEC has taken the attitude that the best cure for low prices is low prices. You have to believe E and P companies will be slashing production left and right," said Peter Boockvar, market strategist with The Lindsey Group.

Daniel Yergin, vice chairman of IHS, said there will be an impact on production and oil prices are going to remain weak and volatile.

"Eighty percent of the production coming on stream from tight oil has an economic return between $50 and $69. At this price level, tight oil will be tested. People have committed for rigs in the short term, but every management is going to go back and review their budgets and we'll see spending reined in further," Yergin said. They'll focus on the most productive wells … spending will be concentrated in the most productive plays."

He noted that many of the quarterly reports from oil companies indicated that they were going ahead with drilling plans but that will change. "No matter what OPEC does in the months ahead, this has changed the psychology of investing in the world oil industry," Yergin said.

The beneficiary of this in the near term will be the consumer, as gasoline prices are continuing to fall and RBOB gasoline futures were down 7 percent for the week, trading under $2 a gallon.

"I think the national average will drop to between $2.55 and $2.60 a gallon by Christmas," said Andrew Lipow, president of Lipow Oil Associates. It was at $2.79 per gallon of unleaded on Friday. As the energy sector was down nearly 9 percent in the past week, the consumer discretionary sector was up more than 2.5 percent. Traders will also be watching for headlines on how the holiday shopping season is progressing.

This article originally appeared in CNBC.

Read more at CNBC:
Could oil collapse cause next credit crisis?
Will OPEC bankrupt US shale producers?
Fed now expected to stay lower for a lot longer