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Saturday March 29, 5:03 AM
Wall St Week Ahead: Stocks may stumble on jobs, earnings viewBy Kristina Cooke
NEW YORK, March 28 (Reuters) -Stocks may struggle to make headway next week, with jobs data expected to provide more evidence of recession and more companies likely to revise their guidance as the earnings reporting season approaches. Investors will also keep a close eye on the credit markets to determine if the Federal Reserve's actions to provide liquidity are taking effect, said John Praveen, chief investment strategist at Prudential International Investments Advisers LLC in Newark, New Jersey.
"There's not likely to be a clear-cut trend next week," Praveen said. "We're still in that high volatile period where we have various cross currents. On the negative side will probably be the macro data and news on banks, and on the positive side, any signs the Fed's actions are bearing fruit." The economic highlight of the week is Friday's jobs report. U.S. employers are expected to have cut payrolls for a third straight month during March. Economists polled by Reuters estimate a reduction of 58,000 jobs. "I wouldn't be surprised to see a deep negative number, and that will be the final nail in the coffin for the people who are not sure if we're in a recession," said Barry Ritholtz, director of research at Fusion IQ, an investment firm in New York. "My sneaking suspicion is that we're in the early stages of a recession and that this will be a deeper and longer one than in 2001." More clues on the state of the economy and the outlook for interest rates could come on April 3, when Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson testify before the Senate. (For more on the outlook for Fed policy, please click on [ID:nFEDAHEAD]) By Friday's closing bell, the three major U.S. stock indexes turned in a mixed performance for the week: The Dow Jones industrial average fell 1.2 percent and the Standard & Poor's 500 Index slid 1.1 percent, while the Nasdaq Composite Index edged up 0.1 percent. EARNINGS LITE With the first-quarter earnings reporting season fast approaching, a number of companies may begin revising their earnings guidance next week, said Joseph Battipaglia, market strategist at Stifel Nicolaus in Yardley, Pennsylvania. "The estimates for S&P ex-financials for the first quarter are a little high, I think, and I'm not so sure they're going to hit those targets," he said. "Now would be the time to come forward." On Friday, retailer J.C. Penney ISM FACTORY, SERVICES DATA ON TAP
Apart from the jobs report, the week's economic data
includes a pair of reports on the economy from the Institute
for Supply Management. On Tuesday, the ISM's report on U.S.
manufacturing conditions will be released. The median forecast
of economists polled by Reuters for the ISM's manufacturing
index is 47.4, down from 48.3 in February.
The ISM report on the service sector of the economy is
scheduled for Thursday, with economists expecting a reading of
48.3 in March, down from 49.3 in February.
Battipaglia noted that as the market is expecting a weak
reading, the number probably will not move the stock market
unless it is a positive surprise.
Factory orders for February and revised durable goods
orders for February are due on Wednesday; the March Chicago
PMI (purchasing managers' index) is due on Monday.
(Wall St Week Ahead runs weekly. Any questions or comments on
this column can be e-mailed to:
kristina.cooke(at)reuters.com)
(Additional reporting by Jennifer Coogan)
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