Repeats SCHEDULED COLUMN originally published on June 7, no changes

By David Randall

NEW YORK, June 7 (Reuters) - Investors will closely watch next week’s inflation numbers and Federal Reserve meeting for clues on whether the soft landing hopes that drove stocks to record highs are still justified.

This year's rally haslifted the S&P 500 up more than 12% year-to-date, on expectations the Fed can cool inflation without hurting growth. Yet recent economic data have sent conflicting signals: U.S. employment numbers released Friday were far stronger than expected, while earlier reports showed a slowdown in manufacturing and a first-quarter growth rate revised lower.

May inflation data, due next Wednesday, must walk a tightrope to satisfy expectations of a "Goldilocks economy": satisfactory growth with prices under control. Later that day, investors will look to the Fed for signals on the central bank's rate cut plans.

“The market would like some clarity and not see the Fed have to wait until December or January to begin cutting rates,” said Paul Christopher, head of global market strategy at the Wells Fargo Investment Institute, adding a long period of elevated borrowing costs could hurt the economy.

Nonfarm payrolls increased by 272,000 jobs last month, the Labor Department's Bureau of Labor Statistics said on Friday, exceeding 185,000 jobs forecast by economists in a Reuters poll. After the data, futures markets showed investors trimming expectations for rate cuts, with chances of a September cut falling to about 55% from about 70% before the report.

Strong employment data countered earlier reports suggesting the economy was cooling, including a June 3 release showing U.S. manufacturing activity in May slowed for a second straight month.

Despite the S&P 500’s march to new records, some investors worrythe gains have concentrated in a few giant technology and growth names such as Nvidia NVDA.O, with the rest of the rest of the market far more tepid.

U.S. stock valuations remain well above historic norms, noted Ed Clissold, chief U.S. strategist at Ned Davis Research. The median price to earnings ratio of the S&P 500 would need to fall 31% to hit its long-term median, and 19% to reach its 20-year norm, he said.

"People are concerned about how far and how high this market has risen and how narrow it has been," said Raul Diaz, senior investment officer at Northern Trust Wealth Management.

Plenty of investors believe strong corporate results and a relatively benign macroeconomic environment can keep supporting stocks. First quarter earnings came in about 8.1% above analyst expectations, according to LSEG data.

“We believe U.S. stocks are likely to remain supported by favorable macro conditions, healthy earnings growth, AI tailwinds, and the potential for a Fed pivot before year-end,” wrote Solita Marcelli, chief investment officer Americas at UBS Global Wealth Management, in a note this week.

The bank recently upgraded its year-end S&P 500 target to 5,500, up 3% from where the index trades today.

Others believe political uncertainty, noteconomic data, will causeturbulence later this year. The first debate between President Joe Biden, a Democrat, and Republican challenger and former president Donald Trump will take place June 27, nearly three months earlier than the Sept. 16 date suggested by the nonpartisan Commission on Presidential Debates, which has managed them since 1988.

That could turn the market’s attention to the 2024 presidential election earlier in the year than usual, said Grace Lee, senior portfolio manager at Columbia Threadneedle Investments.

"The market still on the surface looks like everything is fine, but I think there’s a certain nervousness that may not even be about the economic data," said Lee. "People want to stick to what has been working and not go too far out on a limb into other areas that might see political ramifications, whether it's healthcare and drug prices or clean energy."

Reporting by David Randall; Editing by Ira Iosebashvili and David Gregorio

Wall St Week Ahead runs every Friday. For the daily stock market report, please click .N