Following a solid performance last week, stocks will likely remain in a wait-and-see mode this week ahead of the March non-farm payroll report on Friday. The overall market mood, however, should remain positive given growing evidence that the U.S. recovery remains on track despite the global headwinds.
A strong labor market reading this Friday will provide the market with the fuel to move towards its February highs. And the first quarter earnings season, now just days ahead, will determine the market’s momentum in the coming days. As such, I wouldn’t be surprised if the market doesn’t make major moves in the next couple of days.
The stock market rebound of the last few days reflected a reassessment of the global fear factors, particularly the Japanese nuclear situation, even as a few economic reports came on the softer side. Recent readings of housing, consumer confidence, and durable goods were on the weak side. But you can’t get them all.
The important labor market indicators have consistently remained positive in recent weeks, which makes Friday’s non-farm payroll report so much important. The strong February report followed weak readings in December and January, which were chalked up to unusual weather factors. The recent downtrend in the weekly Jobless Claims numbers indicates that a labor market turnaround may already be underway. But wee will have to wait and see evidence of that in the monthly report this Friday.