NEW YORK: The stronger-than-expected payrolls report did more than ease concerns about US economic fundamentals — it also seemed to justify Wall Street’s record levels, suggesting the market’s uptrend could continue.
February’s jobs report followed two straight months of payroll reports that were sharply below expectations, and the rebound reinforced the theory that the weakness in December and January had been temporary, related to weather as opposed to worsening fundamentals.
That bet has helped equities shrug off bearish data and geopolitical uncertainties in Ukraine, taking the S&P 500 to a series of record highs. However, it also raised concerns that the market may be vulnerable to pullbacks on any indication that conditions have gotten worse.
“We’re hoping the payroll report means we’re on a stronger footing going ahead and that we can get more robust growth going forward,” said Michael Mullaney, chief investment officer of Fiduciary Trust Co in Boston. “Now we’re trading on fundamentals, which we think are fine. We’re comfortable still being long on the market.” In a sign of positive trading momentum, the S&P 500 is 1.3 percent above its 14-day moving average, a level that could serve as support in a market decline.
In the latest week, the Dow rose 0.8 percent, the S&P 500 climbed 1 percent and the Nasdaq gained 0.7 percent. While the Dow and the S&P 500 rose for their second straight week of gains, the Nasdaq advanced for a fifth straight week, up 5.7 percent over that period. On Friday, the S&P 500 ended at a record high of 1,878.04. The milestone marked its fifth record closing high in the past seven sessions. Wall Street has marched steadily higher this year, save for a pullback in late January that came on concerns about emerging markets.
Those worries will remain prominent after Russian President Vladimir Putin rebuffed a warning from US President Barack Obama over Moscow’s military intervention in Ukraine’s Crimea region.
“Weekends are notorious for geopolitical developments, so we might be vulnerable to some kind of shock,” said Terry DuFrene, investment specialist at JPMorgan Private Bank in New Orleans, which has $977bn in assets under management.
Macro issues may have a large influence on trading this week, with little else that could serve as catalysts. Only two S&P 500 components, Urban Outfitters and Dollar General , are scheduled to report quarterly results. Economic indicators on tap include February retail sales, seen rising 0.2 percent, and a preliminary read on March consumer sentiment from the Thomson Reuters/University of Michigan Surveys of Consumers, which is expected to hold flat from February. Reuters
