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 Friday's monthly jobs report, the most widely watched U.S. economic
indicator, is expected to show that employers added 200,000 jobs in
March to nonfarm payrolls, according to a Reuters poll of
economists.
If the March jobs figure is strong, that could convince stock
investors that the U.S. economy's recent setbacks related to the
weather were only temporary.
The rebound in hiring started last month despite the icy weather.
Employers added 175,000 jobs to nonfarm payrolls in February after
creating 129,000 new positions in January.
"We potentially could have a big positive surprise. The polar vortex
is over, and I believe we could get a snapback in payroll numbers
that is significantly better than expected," said Doug Cote, chief
market strategist at ING U.S. Investment Management in New York.
Job growth would be a plus for the market, which has suffered a bout
of volatility as some of the most high-flying shares, including
biotechs, tumbled in the past week.
WATCHING RUSSIA AND UKRAINE
When trading begins on Monday, investors will keep an eye on
developments involving Russia and Ukraine. Over the weekend, the
Ukraine crisis prompted the United States to send its top general in
Europe back to the Continent early from a trip to Washington. On
Sunday, the Pentagon called the move a prudent step, given Russia's
"lack of transparency" about troop movements across the border with
Ukraine.
The Pentagon made the announcement as U.S. Secretary of State John
Kerry and Russian Foreign Minister Sergei Lavrov met in Paris to
work out the framework of a deal to reduce tensions over Russia's
annexation of the Crimea region in Ukraine.
A FULL MENU OF ECONOMIC DATA
Wall Street will get more data on the broader economy this week as
well.
The Institute for Supply Management will release its national
surveys for March on the manufacturing and services sectors, on
Tuesday and Thursday respectively. The indexes are expected to show
improvement from the previous month as well.
Rosier data could confirm for investors that recent weakness in
economic data was caused by the winter's harsh weather, suggesting
the U.S. economy's uptrend is intact.
Improvement in the labor market, along with a pickup in the
manufacturing and services sectors, could also bolster the case for
the Federal Reserve's scaling back of economic stimulus and put more
focus on the timing of when the central bank will begin raising
interest rates.
Car sales for March will be released this week, along with ADP's
private-sector payrolls report for March and data on the U.S.
international trade deficit for February.
Investors will be anxious to get a look at more trade data after
China's weak export numbers earlier this month underscored worries
that the world's second-largest economy is slowing.
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TECHS MAY EXTEND SLIDE
The recent selloff in biotech and other recent big gainers could
persist, strategists said, although so far it has not eroded the
market's bull run. Investors have been putting money instead into
utilities and other sectors.
The Nasdaq biotechnology index <.NBI> fell 7 percent for the week.
With just one trading day left in March, the Nasdaq biotech index
was down about 13 percent for the month at Friday's close.
"There's definitely been rotation out of tech in terms of asset
flows, and energy and utilities have been growing," said John Kosar,
director of research with Asbury Research in Chicago.
For the past week, the S&P utilities sector index <.SPLRCU> rose 1.2
percent and the S&P energy index <.SPNY> climbed 2.5 percent.
FIRST-QUARTER WARNINGS DOMINATE More U.S. companies could issue outlooks for the coming reporting
period in the week ahead. So far, negative outlooks have surpassed
positive ones from S&P 500 companies by a ratio of 6.9 to 1 for the
first quarter, Thomson Reuters data showed.
That's still lower than the ratio for the fourth quarter, but the
high number of negative outlooks has driven profit estimates down
for the first quarter.
S&P 500 first-quarter earnings growth is now expected to increase
just 2.1 percent, down sharply from a January 1 growth estimate of
7.6 percent, the Thomson Reuters data showed.
Among companies that have already reported earnings, FedEx <FDX.N>
said severe winter weather hurt results. FedEx cut its fiscal-year
profit forecast.
Monsanto <MON.N> is due to report earnings this week, along with
Micron Technology <MU.O>. But the earnings season won't get under
way until April 8, when Alcoa <AA.N> is scheduled to report results.
"You'll start to have companies giving you an indication of how the
quarter looked," said Dan Veru, chief investment officer of Palisade
Capital Management LLC in Fort Lee, New Jersey, which oversees $4
billion.
(Wall Street Week Ahead runs every Sunday. Questions or comments on this
column can be emailed to:
caroline.valetkevitch@thomsonreuters.com.)
(Reporting by Caroline Valetkevitch; editing by Jan Paschal)
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