Wall St Week Ahead: Bulls may extend rally from March 2009 lows

By Caroline Valetkevitch

NEW YORK, March 5 (BestGrowthStock) – 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 (BLK.N: ), one of the world’s
largest asset managers with about $3.35 trillion in assets
under management.

“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.


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.


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
(TGT.N: ), one of the largest U.S. discount chains, said
same-store sales rose 2.4 percent for the month.

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

Just a few S&P 500 companies are expected to report
results next week, including The Kroger Co (KR.N: ), the largest
U.S. grocery chain, and Brown-Forman Corp (BFb.N: ) , the maker
of Jack Daniel’s whiskey, Finlandia vodkas and other
well-known brands of alcoholic beverages.

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.

Stock Investing

(Reporting by Caroline Valetkevitch; Additional reporting by
Leah Schnurr; Editing by Jan Paschal)
(Wall St Week Ahead runs every Friday. Questions or comments
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Wall St Week Ahead: Bulls may extend rally from March 2009 lows