A PULLBACK could be on the table this week for US stocks after their best weekly performance in two years, especially if a raft of data headlined by the June jobs report doesn’t bolster the argument of a strengthening economy.
Stocks rose for five straight days as the fog of the Greek debt crisis appeared to once again be lifted while better-than-anticipated economic numbers such as Friday’s manufacturing data gave weight to the belief the US economy was starting to recover from a soft patch.
“What we are looking at is a market that is going to focus on the economic numbers,” said Peter Cardillo, chief market economist at Avalon Partners in New York.
“We had real good gains towards the end of the quarter so it wouldn’t surprise me to see a little bit of profit taking before we get those numbers out during the course of the week.”
Data expected for this week includes factory orders for May, the ISM services index and several indicators on the labour market.
“It is a little bit early to declare victory over the mid-cycle slowdown we’ve had,” said Tim Ghriskey, chief investment officer of Solaris Asset Management in New York.
“On Friday, you have payrolls, unemployment rate – the big Kahuna – and there might be some trepidation going into it, especially with the market having already rebounded sharply here over several days.”