By Wallace Witkowski, MarketWatch
SAN FRANCISCO (MarketWatch) -- Investors will pick through
several economic reports this week, but attention is likely to
focus on jobs numbers due on Friday.
Stocks finished lower last week with a big selloff on Thursday
that left many investors scrambling. On the week, the Dow Jones
Industrial Average (DJI) declined 1%, the S&P 500 Index (SPX)
fell 1.4%, and the Nasdaq Composite Index (RIXF) was down 1.5%.
Just the passage from September to October could be enough to
amp up volatility in stocks. The CBOE Volatility Index (VIX) rose
22% to 14.80 in the past week alone.
On Friday, GDP growth was revised upward to 4.6% on the back of
business investment. Still, investors need convincing that will
translate into jobs.
"Everybody sees the slow pace of the economic recovery but not
at the level they want it to be," said Robert Pavlik, chief market
strategist at Banyan Partners. "They're not seeing the big jobs
growth."
Analysts surveyed by MarketWatch expect the addition of 220,000
jobs for September, up from August's 142,000 jobs. Pavlik said he
thinks most people expect that August number to be revised higher,
perhaps as high as 200,000, with September figures beating
estimates.
Other data due this week include August consumer spending and
personal income figures on Monday, the Chicago PMI and consumer
confidence data on Tuesday, and the ISM manufacturing index on
Wednesday.
Stocks are likely to be choppy, however, as real bargains are
scarce and buying-the-dip mentality is prevalent.
"I don't see the market falling backwards, maybe taking a step
back as retail investors and hedge funds try to game this thing,"
Pavlik said.
Relatively quiet earnings until mid October
This week will be relatively quiet on the earnings front with a
few companies reporting such as Cintas Corp. (CTAS) on Monday,
Walgreen Co. (WAG) on Tuesday, and McCormick & Co. (MKC) and
Constellation Brands Inc. (STZ) on Thursday.
Earnings won't ramp up until mid-October, when the major banks
report, but concern still remains that a rise in the dollar will
undercut results from companies that have a significant
international presence.
A stronger dollar is a symptom that international economic
growth is slowing down, said Barclays strategist Jonathan Glionna
in a recent note.
Glionna said the tech and industrial sectors are heavily exposed
to international sales and that the energy and materials sectors
are doubly exposed because commodity prices are linked to the
dollar.
It remains to be seen whether a stronger dollar will cut into
earnings this season. Nike Inc. (NKE), which reported Thursday,
topped Wall Street estimates even though it has a large exposure to
international sales.
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