US stocks could start this week with investors feeling a bit more optimistic about the economy, due to a stronger-than-expected jobs report, making further market gains more likely.
Friday’s nonfarm payrolls report was the latest of the week’s data to suggest the economy may not be headed for another severe downturn, as many investors have feared.
All three major US stock indexes rallied more than 1 per cent on Friday, with the Dow Jones industrial average nudging back into the black for the year. The Standard & Poor’s 500 Index scored a gain of 3.8 per cent for the week, marking its best week in eight, and starting September – typically the weakest month for the market – on a strong note. In contrast, for the month of August, the S&P 500 fell 4.7 per cent.
The economic calendar will be light this week, especially since it will be cut short by a long holiday weekend with the US stock market closed for Labor Day today. But the agenda will include the international trade deficit data, which investors will scrutinise for clues on spending. The latest weekly jobless claims numbers are due as well.
High unemployment and weak consumer spending have been among the toughest hurdles to sustaining the economy's recovery from the worst downturn since the 1930s.
Though the stock market ended this week with gains, the S&P 500 was unable to break out of a trading range of between 1,040 and 1,130, and some analysts see that range-bound trend continuing.
For the week, the Dow Jones industrial average rose 2.9 per cent, while the S&P 500 advanced 3.8 per cent and the Nasdaq gained 3.7 per cent.
September is typically the weakest month for stock market performance, according to the Stock Trader’s Almanac. The S&P 500 has declined 0.7 per cent on average during September in the years since 1950, the Almanac says. However, on the day after Labor Day, the Dow has risen in 12 of the last 15 times, the Almanac notes.