Bulls may get more room to run next week on the anniversary of the March 2009 lows -- if U.S. stock investors see more signs of stability after Friday's rally on smaller-than-expected job losses.
The catalysts could be February retail sales and March consumer sentiment.
On Friday, stocks jumped after U.S. Labor Department data showed employers cut fewer jobs than expected in February, which enhanced the perception that the job market may be on the verge of recovery. The Nasdaq <.IXIC> marked its highest close in 18 months. Both the Dow Jones industrial average <.DJI> and the Standard & Poor's 500 Index <.SPX> closed at six-week highs.
Tuesday will mark the first anniversary of the stock market's slide to 12-year closing lows on March 9, 2009. Since then, the Standard & Poor's 500 Index <.SPX> has climbed nearly 70 percent.
Much of the stock market's gain has been driven by stronger-than-expected economic data and earnings, which have pointed to a recovery.
But investors have been eager to see more robust signs of strength, especially in the nation's job market.
Jobs are absolutely key, said Bob Doll, chief equity strategist for BlackRock Inc
The manufacturing sector is improving. The U.S. consumer, at least in soft goods, is spending some money, inflation remains contained, housing is bottoming, and the next thing investors need to see is some job growth.
Unemployment near 10 percent has, in part, held back consumer spending, economists have said.
Next Friday brings the Commerce Department's monthly retail sales data for February along with the Thomson Reuters/University of Michigan preliminary reading on March consumer sentiment.
Besides that data, investors will have weekly jobless claims and the international trade deficit to mull over.
Investors will also keep their radar trained next week on Greece's debt problems, which could keep a lid on sentiment.
STRONG WEEK FOR STOCKS
The three major U.S. stock indexes finished the week on a strong note. For the week, the Dow Jones industrial average rose 2.3 percent, while the S&P 500 gained 3.1 percent and the Nasdaq Composite Index climbed 3.9 percent, its best weekly gain since October.
A year ago, the Dow and the S&P 500 were trading at 12-year lows, with uncertainty over a plan to salvage banks among the thorny issues hanging over the market.
The black clouds of the day a year ago were the non-zero probability of depression and the concern about the potential nationalization of the banking system, Doll said.
The dissipation of those two concerns has led to this massive rally. and now it's going to be grinded out with economic recovery and earnings improvement, he said.
REASSESSING THE SNOW JOB
For Friday's retail report, the consensus forecast, according to economists polled by Reuters, calls for a decline of 0.2 percent in February, compared with a gain of 0.5 percent in January. Ex-autos, the forecast is for a gain of 0.1 percent in February versus January's gain of 0.6 percent.
Analysts have said severe U.S. winter snowstorms last month may have had a negative impact on the data.
The snowstorms could have probably done some damage to the February data of retail sales. So people will be looking at what damage that has done to consumer spending, said John Praveen, chief investment strategist at Prudential International Investments Advisers LLC in Newark, New Jersey.
This week, U.S. retailers reported stronger-than-expected same-store sales for February, despite the storms. Target Corp
Consumers are not going to lead the U.S. economy, but they're not going to drag it down, like so many people thought, Doll said.
The Thomson Reuters/University of Michigan preliminary sentiment reading for March is expected to come in at 73.6. That compares with a final February reading of 73.6.
Friday also will bring data on business inventories for January.
Just a few S&P 500 companies are expected to report results next week, including The Kroger Co
More than 70 percent of S&P 500 companies have beaten earnings estimates for the fourth quarter, well above the 61 percent in a typical quarter, according to Thomson Reuters, which began tracking data in 1994.
(Reporting by Caroline Valetkevitch; Additional reporting by Leah Schnurr; Editing by Jan Paschal)