US STOCKS are unlikely to break above a key technical level this week unless monthly jobs data and consumer company results paint a more promising picture of the recovery.
The Standard & Poor’s 500 index has been stuck near its 200-day moving average, a level used to determine market direction, amid recent weak economic data and disappointing outlooks from companies, including tech companies Nvidia and Symantec.
Options market activity points to more tech sector volatility this week, while the Nasdaq had the poorest performance of the three major indices last week.
Among companies expected to report this week are Procter & Gamble and Clorox whose results could give another glimpse into the strength of consumer spending or lack thereof. But the government’s nonfarm payrolls report, due Friday, looms large since sluggish job growth is considered the biggest hurdle to advances by the economy and stocks.
The Labor Department report follows data Friday that showed the pace of US economic growth slowed in the second quarter. The June labour report showed a fall in payrolls, both of which raised concerns about the recovery for the rest of the year.
Analysts say a significant break above the S&P 500’s 200-day moving average, currently around 1,114, would be a bullish signal.
The US economy has shown weakness in recent months after a recovery from the worst recession since the 1930s, and corporate results for the second quarter have been mixed.
Earnings growth for S&P 500 companies in the second quarter is expected at 36 per cent, while revenue growth is seen at about 9.1 per cent, according to Thomson Reuters data.
In other key economic data this week, the Institute for Supply Management’s manufacturing report, due today, is expected to show growth for a 12th straight month.