After a terrific 1st quarter, a big week ahead

Updated: 11:43 p.m. Friday

After a first quarter that had to warm the hearts of investors, the week ahead offers a big-time roadblock: the March jobs report.

The biggest economic report of any month, it should show that the economic recovery, while not booming, is steady. It should explain why auto sales reports from manufacturers, due Tuesday, continuing to run near a 15-million annual rate.

But the jobs report will also come as gasoline prices have risen nearly 19% this year, and the big unknown is if -- or how much -- they're forcing consumers to change their spending habits.

While the jobs report is the week's big kahuna, there are important reports in the week ahead on manufacturing, factory orders and construction spending. In a week of few earnings reports, several will be scrutinized closely: home-furnishings retailer Bed Bath & Beyond (BBBY), seed producer Monsanto (MON), used-car dealer Carmax (KMX) and Constellation Brands (STZ), the owner of a host of premium wine brands and the distributor of Corona beer.

So all those bulls who were delighted to see the market's amazing first-quarter performance may find themselves clenching their jaws.

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The Dow Jones industrials ($INDU) and Standard & Poor's 500 Index ($INX) both had their best first-quarter gains since 1998: 8.1% and 12%, respectively. The Nasdaq Composite Index ($COMPX) had its best first-quarter gain -- 18.7% -- since 1991.

The gains came despite a 6.7% gain in the price of gold (-GC), a 16% gain in the price of silver (-SI) and a 4.3% gain in the price of light sweet crude (-CL), the benchmark U.S. oil.

The market went up this past week in spite of disappointing housing numbers over the last two weeks. Sales don't appear to be rising as quickly as thought, and home prices may not have bottomed -- yet.

What to expect from the jobs report
There are the two big numbers: the unemployment rate and nonfarm payrolls.

The unemployment rate should hold at 8.3%, its rate in February. Some economists, including Nigel Gault at IHS Global Insight, see the rate slipping to 8.2%. A jump would be a shock.

Nonfarm payrolls are seen rising by 210,000, perhaps 225,000, with private-sector jobs growing by 235,000.

The speed of the recovery from the 2008-09 recession has been painfully tentative and  frustrating. That's one reason Federal Reserve Chairman Ben Bernanke warned several times this past week that an economic recovery is not yet assured.

Higher gas prices and a break in the auto recovery could derail things. So could a deep recession in Europe. Gasoline will probably hit $4.30 a gallon as the national average before peaking in late spring or early summer. Unless Iran and Israel start firing missiles at each other. At which point all bets are off.

More in a week of big reports:
Here's what else is coming this week:

Institute for Supply Management Manufacturing Index, due Monday. This is the week's second-biggest report. This is expected to rise to 54, up from 52.4 in February. A reading above 50 signals economic expansion. But don't look for big gains going forward because of a softer Chinese economy and weakness in Europe.

Auto sales from major manufacturers, due Tuesday. Look for sales to come in at a 14.5-million-unit rate, possibly a 15-million rate.

ISM non-manufacturing index, due Wednesday. Expect a small decline to 56.6. The decline may simply be noise, IHS Global Insight.

ADP National Employment Report, due Wednesday. This report is expected to project a gain of 235,000 private-sector jobs in March.

Initial jobless claims, due Thursday. Look for another month of claims at levels not seen since 2008.

In addition, China may cut interest rates over the weekend, and an important report on Chinese manufacturing is due. Germany's version of the ISM report comes out Monday, and unemployment reports from Italy and the overall eurozone are due.

Markets for the week
			3/30/2012			3/23/2012			% chg.			YTD chg.
Dow Industrials			13,212.04			13,080.73			1.00%			8.14%
S&P 500			1,408.47			1,397.11			0.81%			12.00%
Nasdaq			3,091.57			3,067.92			0.77%			18.67%
Russell 2000			831.36			830.03			0.16%			12.21%
Crude oil			$103.02			$106.87			-3.60%			4.24%
(per barrel)
U.S. Dollar Index			79.14			79.58			-0.55%			-1.72%
10-yr. Treasury			2.22%			2.24%			-0.94%			18.44%
Gold			$1,671.90			1,662.40			0.57%			6.71%

Earnings reports may show increasing consumer confidence
The first-quarter earnings season won't start for a week or so. Alcoa (AA) is the start of the season after the close on April 10, and the heaviest percentage of reports will come in the latter half of April.

But this week has a few reports of interest.

Tuesday: International Speedway (ISCA). The company, which runs 13 auto-racing tracks, is expected to report up to a 20% decline in revenue and a 10% earnings decline. NASCAR may have peaked.

Wednesday: Bed Bath & Beyond and Monsanto. BBY's shares have risen nicely over the last year, and the company has said it expects results to meet analyst estimates: $1.33 in earnings and $2.66 billion in revenue. Watch what the company says about housing.

Monsanto is expected to report $2.12 a share in earnings, up from $1.87 a year ago, on revenue of $4.53 billion. The stock may get more activity with Friday's report of tight U.S. grain supplies.

Thursday: Carmax and Constellation Brands. If Tuesday's auto sales report is strong, look for good results from this operator of used-car dealerships across the country. Revenue is expected to grow 6.7% to $2.4 billion. Shares have risen 431% since the 2008 financial crash.

Constellation owns the Robert Mondavi, Clos du Bois and Simi brands. It is a pure play on consumer willingness to pay up for fun. Shares have risen 113% since April 2009.

Some quick notes about first-quarter results:
And the winners were:

• Dow Jones industrials: Bank of America (BAC) and JPMorgan Chase (JPM), up 72% and 38%, respectively. Only three of the 30 Dow stocks were lower: Hewlett-Packard (HPQ), Verizon Communications (VZ) and McDonald's (MCD).
• S&P 500:Sears Holdings (SHLD), up 108.5%; Bank of America; Netflix (NFLX), up 66%; Whirlpool (WHR), up 62% and Priceline.com (PALL), up 53.4%. Losers: supermarket operator SuperValu (SUP); for-profit college operator Apollo Group (APOL) and solar-panel maker First Solar (FSLR).
• Nasdaq-100 Index ($NDX): Winners were Sears, handbag-merchant Fossil (FOSL), up 66.3% and Netflex. Losers: Monster Beverage (MNST) and Apollo Group.

Where's Apple? Good question. The short answer is everywhere. The stock was up 48% in the quarter, 10th-best among S&P 500 stocks and sixth among Nasdaq-100 stocks. It was up as much as 53% for the quarter on Wednesday before selling down Thursday and Friday. It was responsible for roughly 9% of the S&P 500's gain for the quarter and 27% of the Nasdaq-100's gain of 21% in the quarter.

This is a pricey stock. It finished the week at 42% above its 200-day moving average after reading a peak of 47% over the moving average on Wednesday. Its relative strength index is above 70, which is a sign it's overbought.

Why has Sears been a winner? It has lost money for five straight quarters and is shopping its Lands' End catalog business, The answer seems to be that allies of Chairman Edward Lampert want to support the stock, which had fallen to as low as $29.20 in late 2011, an 85% decline from its April 2007 peak. How long they can keep it up is another question.

Techs and financial stocks were tops in the quarter. Well, Apple was tops, but Microsoft (MSFT) was up 24.3%, disc-drive maker Seagate Technology (STX) added 53.4% and Broadcom (BRCM) jumped 33.6%. None has a market cap like Apple's: $559.87 billion.  (Microsoft is the publisher of MSN Money.)

Bank of America, Regions Financial (RF), 53%, Citigroup (C), up 39%, and JPMorgan Chase were the top performers among banks.

Where were the losers in the quarter: Utilities, bonds and bond funds. Interest rates rose in the quarter, with the 10-year Treasury yield rising to 2.216%, up from 1.87% at the end of 2011. The iShares Barclays 20+-Year Treasury Bond exchange-traded fund (TLT) fell 7.5% in the quarter. The Dow Jones Utilities Average ($UTIL) fell 1.2% in the quarter.

Where are the risks in the next three months? That the market could get too expensive for many investors and sell off. The Dow, S&P 500 and Nasdaq are up 27%, 31% and 34.5%, respectively, since bottoming in early October. Europe's debt crisis hasn't gone away, and there are worries about China's economy.