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 A pickup in retail sales could show consumers are benefiting from
sharply lower oil prices, but analysts say spending in February was
likely curbed by unusually harsh weather in parts of the United
States.
Friday's stronger-than-expected jobs report boosted expectations of
a U.S. rate increase as soon as June, causing the market to sell
off.
The S&P 500 ended the week more than 2 percent off its March 2
closing record high, while the Nasdaq was more than 70 points off
the 5,000 mark, which it hit this week for the first time since
March 2000.
Comments from some Fed officials underscored expectations of a June
rate hike. Among them, Richmond Federal Reserve President Jeffrey
Lacker repeated his view that the Fed should raise rates in June.
"The Fed is back at the top of the circle" in terms of the investor
focus, said Kim Forrest, senior equity research analyst at Fort Pitt
Capital Group in Pittsburgh.
"I think they're feeling some pressure to show that they really are
data driven. The economy has been getting better, and what I think
they're trying to do is overstay the party to make sure the economy
really is better."
In the jobs data released Friday, unemployment dropped to a six-year
low of 5.5 percent last month, within the range the Fed considers to
be full employment. A Reuters poll conducted following the report
showed many of Wall Street's biggest banks are more convinced the
Fed will raise rates in June.
While a stronger U.S. economy is better for the U.S. stock market in
the long run, investors have worried that if the Fed raises rates
too soon, it could dampen growth in an economy that has been slow to
recover.
Besides U.S. retail sales, next week brings the preliminary March
reading on consumer sentiment from the University of Michigan.
Sentiment unexpectedly fell in February from an 11-year high, adding
to recent worries about spending.
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Apple, which rose 0.2 percent on Friday after S&P Dow Jones Indices
announced the stock would be added to the blue-chip index this
month, will remain in focus next week when it is expected to unveil
the long-awaited Apple Watch in San Francisco on Monday.
Also on Monday, the European Central Bank is due to begin its
one-trillion-euro stimulus plan, an effort to jump-start the
struggling euro zone economy by buying bonds.
That could increase volatility, said Jeff Carbone, managing partner
at Cornerstone Financial Partners in Huntersville, North Carolina.
"You look around the world and you've got a deflationary"
environment in many countries, he said. "A rise in interest rates is
knocking at the Fed's door, but there still doesn't seem to be
enough strength out there to make it happen."
(Reporting by Caroline Valetkevitch; Editing by James Dalgleish)
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