While markets have held near record levels, there are signs equities have been stretched and could be vulnerable this week, when a number of key economic indicators come out.
If any of these, including the February payroll report, extend a recent trend of disappointing data, that could shock indexes out of their ranges and send them lower.
About 238,000 jobs are expected to have been added in February, according to the non-farm payroll report that will be released on Friday, down from the 257,000 added in January. Separately, readings on both the manufacturing and services sectors are on tap, as is a report on factory orders.
“Economic data will be the biggest driver of market moves over the next month, and the key one is the jobs report,” said Jim McDonald, chief investment strategist at Chicago-based Northern Trust Asset Management. “Right now, there continues to be a reasonable amount of scepticism regarding the market outlook.”
Recent data has pointed to weakening conditions. Growth slowed more sharply than initially thought in the fourth quarter, while the Institute for Supply Management-Chicago Business Barometer fell to its lowest since July 2009.