Jobs report will make or break markets next week

The February jobs report and Europe will command the most investor attention, along with reports on factory orders and the service economy. Apple will show off its new iPad. Earnings are due from Dick's Sporting Goods and Brown Forman.

By Charley Blaine Mar 2, 2012 9:49PM
Charley BlaineUpdated Monday, March 5, 7 am ET. The bad news about the stock market this past week was that it went nowhere after the Dow Jones industrials ($INDU) closed above 13,000 on Tuesday. The good news is that it went nowhere.

The coming week may result in a sizable market move. Friday's big jobs report could be the most significant news. A good report -- with, say, more than 200,000 jobs created and a decline in the unemployment report from January's 8.6% -- should cheer everyone. A shortfall could send the market into a funk, perhaps a major funk.

But on Monday morning, it was tension over Iran's nuclear program that was generating volatility in global markets, crude oil (-CL) and gold (-GC). Worries about Europe were also causing skittishness among investors.

Expect a lot of excitement Wednesday when Apple (AAPL) is expected to introduce a new iPad model and maybe its long-awaited Apple TV.

This week left many investors concerned. The Dow couldn't move anywhere once it closed at 13,002 on Tuesday. Neither could the Standard & Poor's 500 Index ($INX), which closed at a four-year high on Tuesday and another four-year high on Thursday and then stalled. The Nasdaq Composite Index ($COMPX) briefly topped 3,000 on Wednesday but failed to hold that level. Its Thursday close of 2,989 was its best since December 2000.

Article continues below.
One can read this stall two ways:
  • The market is consolidating and waiting for a catalyst to move higher. A bullish jobs report.
  • The market is toppy and just needs a shove to fall back.
Most analysts see this scenario: The toppiness will lead to some sort of pullback. The major averages are up around 25% since October, a big, fast move. The Nasdaq is trading 11.4% above its 200-day moving average, which is a bit high. The index's relative strength index, which measures current performance against past returns, is close to a high.

But there isn't a worry that the market is looking as wacky as it did in, say, 2000 or 2007.

The Dow Jones Transportation Average ($DJT), a leading economic indicator, has been sliding. So has the Russell 2000Index ($RUT), which tracks small stocks. A declining Russell suggests the market leadership is narrowing. You want leadership to broaden. You can see charts for the transports here and the Russell here.

Oil prices have risen and really could shoot higher if someone starts firing missiles in the Persian Gulf. And Europe is still an issue. Greece was downgraded Friday by Moody's Investor Service, and Spain said its finances are not struggling.

But maybe the market will get lucky. Here's what to look for.

The jobs report is everything
As we often note, the Labor Department's jobs report, due before Friday's open, is the most important economic report of any month. The question in February is whether the modest strength seen in the late fall and January will continue.

Most economists see nonfarm payrolls rising by some 220,000, a bit less than January's 243,000, with the unemployment dropping to 8.2%. That would reflect strength in the auto sector and other areas of manufacturing and maybe some improvement in construction.

A big worry is if there's too much euphoria, especially with crude oil at $106 a barrel and the price of retail gasoline up 14% this year.

A hint of what the jobs report will say will come Wednesday with the ADP National Employment Index, which tries to gauge trends in private-sector jobs, and Thursday with the government's weekly report on jobless claims and the Challenger Gray & Christmas report on layoffs.

Also due in  the week ahead:

Monday: The Institute for Supply Management's non-manufacturing index, a good gauge of the services economy, and the Commerce Department's report on factory orders.

Wednesday: Government reports on productivity and consumer credit growth.

Friday: Reports on the nation's trade balance and wholesale inventories.

Markets for the week



3/2/2012

2/24/2011

% chg.

YTD chg.
Dow Industrials

12,977.57

12,982.95

-0.04%

6.22%
S&P 500

1,369.63

1,365.74

0.28%

8.91%
Nasdaq 

2,976.19

2,963.75

0.42%

14.24%
Russell 2000

802.42

826.92

-2.96%

8.30%
Crude oil 

$106.70

$109.77

-2.80%

7.96%
(per barrel)











U.S. Dollar Index 

79.46

78.40

1.35%

-1.32%
10-yr. Treasury

1.99%

1.98%

0.46%

6.15%
Gold

$1,709.80

1,776.40

-3.75%

9.13%

Earnings: Dick's Sporting Goods, Brown Forman and more
There are a large number of earnings reports. Here's a quick rundown of some of the key reports.

Monday: Arcos Dorados Holdings (ARCO), Steinway Musical Instruments (LVB) and NutriSystem (NTRI). Steinway and NutriSystem should give us a feel for discretionary spending. Arcos Dorados is McDonald's (MCD) largest franchisee and owns most restaurants in Latin America.

Tuesday: Dick's Sporting Goods (DKS), Pandora Media (P) and Vail Resorts (MTN). Dick's will tell us how sporting goods are doing. Pandora is a play on Internet music and a gauge of how initial public offerings are faring. Short answer: The shares started trading at $16 and are now at $13.90. Vail is another measure of consumer confidence.

Wednesday: Brown Forman (BF.B), Ciena (CIEN) and Hovnanian Enterprises (HOV). Brown Forman makes Jack Daniel's whiskey. Ciena makes mother boards. Hovnanian will offer a picture of whether there really is a housing recovery.

Thursday: Brewing giant Anheuser Busch Inbev (BUD), Canadian Imperial Bank of Commerce (CM) and Smithfield Foods (SFD). Smithfield will let us see inflation. Soybean prices have been rising because of drought in Argentina and elsewhere.
172Comments
Mar 2, 2012 11:14PM
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keep playing with those numbers obama, people just gave up looking for work, the work they found, part time low wages without healthcare. yea ho, who cares, obama didn't do anything yet and doubt he will, he is the man with the mask, the new world order, do you people really want to live like that, we will be in war forever, just think about, the world as one, that will never happen, look at iraq, Bush set the date and signed and we leave under obama's watch and they went right back to fighting. not big scale but they are. but whatever. to old to give a crap, but the younger, beware, obama will promise but will never give, he is playing with everyone of you until you believe. not a place for this but i will keep writing about this everywhere. sorry folks.
Mar 3, 2012 12:10AM
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There are some jobs alright, but not the good ones we lost. Fast food, janitorial, temp work. This is just propaganda for the upcoming election, or a sociologist attempt at a moral booster.

 

There still needs to be a shred of truth in any contrived moral booster. This is BS

Mar 3, 2012 12:03AM
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For anyone to believe the economic statistics that our government is selling is amazing.  For them to keep telling us that the unemployment rate keeps going down without explaining the fact that there are 6 million fewer workers in the workforce, than in 2008, defies any kind of logic.  Also we are economically on a flat trajectory with growth, they are using old calculating methods that do not take into account two important shifts that have taken place in the 21st century. One being the interdependency of all major world economies and the other being the lack of real industrial production and wealth creation in the U.S.

Mar 2, 2012 11:55PM
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Does the author really believe what he writes?  Is he drinking his "happy" juice? 200,000 jobs - where, with who and how much? I DO NOT believe it........   The American people are NOT stupid - common sense tells them to look around their state's environment - do they see fewer and fewer people desperately financially hurting because at long last they have employment - NO NO NO !  When are we, the American public, going to stand up and say ENOUGH - God what I would give for news reporting that ISN'T democratically biased.  You know in the 1960's and 1970's I bet NO ONE could tell what political affiliation the news was or their reporters.....  just the news - you decide.........  I want to return to those ethical standards - maybe then we can move forward in a POSITIVE atmosphere of HOPE !!!!!
Mar 2, 2012 11:41PM
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The jobs reports are a sham and some of the most maniplated data that's pumped out by our govt.  The Bureau of Liars and Shills (BLS) will surely overinflate and massage the numbers (even more than usual) during an election year.  For example, explain how the food stamp program just hit another all time high usage this week if all these jobs are coming back, and why foreclosures are rising, rates dropping, and home values falling.
Mar 3, 2012 12:28AM
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if it is down it is because people have already lost there unemployment and can't find a job so they don't report them!!!
Mar 3, 2012 12:01AM
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WHY HAS OUR GOVERNMENT ALLOWED AMERICAN CORPORATIONS TO PROSPER AT THE EXPENSE OF AMERICAN JOBS GOING OVERSEAS!  IT IS THE AMERICAN MIDDLE CLASS WORKER WHO MADE THIS COUNTRY WHAT IT ..WAS!  A COUNTRY THAT IF YOU WANTED TO WORK HARD YOU COULD PROSPER AND A COMPANY WOULD COMPETE FOR YOUR EMPLOYMENT! NOW THE MIDDLE CLASS WORKER HAS BECOME THE WORKING POOR AT THE EXPENSE OF A GOVERNMENT BOUGHT, PAID FOR, AND CONTROLLED BY CORPORATE LOBBYISTS. OUR ECONOMIC ECONOMIES OF SCALE IN THIS COUNTRY IS A DISASTER! CEOS MAKING MILLIONS AND THE FEW WORKERS LEFT IN AMERICA WHO HAVE TO ACCEPT WAGES GOING THE OPPOSITE DIRECTION GET PAID JUST ENOUGH TO GET THE JOB DONE THAT CANNOT BE DONE OVERSEAS! THE RESULT: NO WAGES, NO SALES, NO GROWTH IN THE AMERICAN ECONOMY! ATTENTION CONGRESS: IF A COMPANY PROFITS AT THE EXPENSE OF AMERICAN JOBS AND WAGES, THEY WILL PAY HIGH TAXES! ANY AMERICAN COMPANY WHO FIGURES OUT A WAY TO HIRE AND MANUFACTURE PRODUCTS HERE IN AMERICA WILL PAY VERY LOW TAXES. AS A RESULT, THE MORE AN AMERICAN WORKER EARNS, THE MORE THE GOVERNMENT GETS FROM PAYROLL TAXES.  
Mar 5, 2012 12:26AM
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a true corporate citizen of America would not take the jobs overseas in the first place, but would keep them here in America that allowed them to begin, grow and succeed - safe, protected and subsidized as they grew...

A true international enterprise would design and manufacture products in the most economical manner possible and invest the capital returned in those markets generating the most return. Capitalism is not about being fair to the public, it's about generating the most return on invested capital. Capital is invested by bondholders and stockholders not governments or the public at large unless the government is socialistic.

Mar 5, 2012 8:26AM
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How about a real jobs report ?????   Not some made up crap to make people feel good and think things are getting better when we are still going nowhere.
Mar 3, 2012 2:55AM
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Surprised painter - i am a high-end cpa, lots of small biz, etc. - what do you mean that you are paying income tax on your health insurance contributions?  self-employed health insurance is fully deductible - see schedule c line 15 flows to form 1040 line 29.

 

maybe you need a new tax preparer and not a new healthcare law??? 

Mar 5, 2012 8:58AM
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WHAT JOBS REPORT?  NOBODY  I KNOW HAS FOUND  A REAL JOB!!!  A POSITION WITH A COMPANY THAT ACTUALLY PAYS A WAGE THAT THE MAJORITY OF AMERICANS WHO FALL INTO THE MIDDLE CLASS CAN KEEP UP WITH INFLATION! 

THE PEOPLES JOB REPORT SCORE IS.....A BIG ZERO FOR WASHINGTON--YOU'RE FIRED!!
Mar 3, 2012 9:14AM
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The whole first year of the Obama administration was wasted on healthcare. Way too much time to healthcare rather than the economy. This is what you get, when you don't take care of imprtant business at hand! No more Obama in 2012!
Mar 3, 2012 3:35AM
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I have no faith in Government employment numbers. To think that the market hinges on fake statistics is laughable.

The number of workers in the U.S. is some 5 million less now than it was in 2008. Unemployed, who are no longer eligible for unemployment benefits, are no longer counted as unemployed. The birth/death numbers are a sham.

The talking heads say thing are looking up, I don't think so. Eventually and probably very soon economics will dictate

and the market will follow suit, dow 5000 anyone!!!! 

Mar 4, 2012 11:47PM
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BigDoll...  I told them exactly what my Attorneys told me I could say...  That the company would no longer provide any insurance coverage the day Obama takes effect.  That the comapny will elect to pay the government penalty tax.   That they will be on their own.  

 

Nothing more...  And they informed me that was perfectly fine.  They will have no case what so ever.

They are free to take full advantage of Obamacare.  Or purchase their own coverage.  Since many other business' will do this, I am sure there will be plenty of lawsuits...  Bring them on.  Obamacare lawsuits will take decades to settle, if it even survives.  In any case, there is zero regulations or laws that require insurance coverage continue.  

 

I will be out of the insurance business and will actually save a lot of money. 

Mar 5, 2012 12:14AM
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Thinking hmmmm ....

 

"truth is treason in the empire of lies"

 

makes me think of the intellectual "empires" or mindsets of many we have these little discussions with on this site ... i am quite sure i have had my last cigarette and faced the firing squad many times in their minds .... as zapata said - it is better to die on your feet than go on living on your knees ....  

Mar 3, 2012 10:16AM
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Comrade ActiveRIA...

 

Let me give you some real world experience to comment on....

 

One during this recession, my sales declined 6%  in 2008, and 2%  in 2009, then have risen 2% in each 2010 and 2011.  I remained profitable during the entire time, withh 2011 being a banner year (mostly due to a move from Illinois to Texas).  I didn't react to the recession with layoffs.  If anything I kept too much capacity.  I have let attrition take its course.  When the recession started I'd say I had close to 15% excess capacity.  That increased to close to 30%.  Right now it sits at about 20%.

I figure I could support 2-3% growth in UNITS (not dollars) without adding an employee for 5+ years.  So with this anti-business adminsitration why would I hire?   I can just maintain the status quo, and enjoy the record profits.  Why take risks in this environment?  If I am right, then I will not be hurt.  If I am wrong, then I really have a couple of year cushion to react.  So far I think I am right.  We have a 'monetary explosion' that has not created any real demand.  Sure my prices pretty much match the growth in M2, but by units there has been almost no growth in demand.

 

I am going to continue to 'hunker down'.  Feel free to hire away.  I won't until Obama is gone.

Mar 4, 2012 10:00PM
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Good evening and good luck gentlemen. Here's hoping those among us that insist on paying back foreigners before taking care of America do not succeed.
Mar 4, 2012 9:35PM
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bigdoll,

 

Fed tax take is 26% of the GNP. The historic average is less than 20%

Mar 3, 2012 12:48AM
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i think if we could get all the people that are with out a job to band together and go make a real stand on dc right in front of the white house and congress just maybe some one would listen!!
Mar 4, 2012 8:41PM
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BigDoll... I am already planning for another 4.5 years of this anti-business climate.  Hell in 2014, I will be out of the Healthcare business altogther.  I have already informed the employee's that we will be dropping all healthcare coverage.  They will be some of the first to join Obamacare.  I figure I will pay myself a huge bonus for that...  The fines the government will charge are about 25% of the actual cost.  Of course, the employees will be on their own.   I am OK with it.  I am thinking with their costs soaring they will not.  But I am OK with that too, that's Obama's problem, not mine.

 

You can run your business anyway you see fit.  You have noted I have not told you how to run yours.

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