The March jobs report will take center stage this week as a fairly light schedule eases investors into a new month and quarter.
A handful of corporate earnings will dot the schedule, with the economic calendar keeping investors busier than the corporate side as reads on manufacturing activity, job openings, auto sales, and initial jobless claims are all set to feature ahead of Friday's key jobs report.
U.S. markets will be closed on Friday for Good Friday.
The March jobs report is expected to show 238,000 nonfarm payroll jobs were added to the U.S. economy last month with the unemployment rate set to hold steady at 3.6%, according to data from Trading Economics. In February, the U.S. economy added 311,000 new jobs while the unemployment rate ticked higher as participation increased.
This report would mark a second-straight slowdown from the blowout jobs numbers seen in January, which saw more than 500,000 new jobs created in a number that many economists saw as being aided by fair weather and seasonal adjustments gone awry.
February's solid job growth, however, suggested the labor market remains on solid footing, with Federal Reserve Chair Jerome Powell saying in a press conference last month saying the labor market is "extremely tight." Monthly job gains have averaged 343,000 over the last six months.
"[With] job vacancies still very high, labor demand substantially exceeds the supply of available workers," Powell said. "FOMC participants expect supply and demand conditions in the labor market to come into better balance over time, easing upward pressures on wages and prices."
The Fed's forecasts released in mid-March showed officials see unemployment rising to 4.5% by the end of this year.
Investors also continue to look for signs the turmoil in the banking sector is weighing on broader economic activity, though economists don't expect to see marked impacts from the collapse of Silicon Valley Bank in Friday's jobs data.
"The March report comes too early to capture much impact from the recent banking sector woes, with the troubles at SVB not coming to a head until near the end of the survey period," wrote Andrew Hunter, deputy chief U.S. economist at Oxford Economics, in a note to clients on Thursday. Hunter noted that if impacts from tighter credit conditions do impact the labor market in time, those effects likely won't begin appearing until April's data.
Consumer confidence readings from The Conference Board and the University of Michigan released last week show few signs of this stress appearing more broadly in economic data.
On the earnings side, a light schedule brings a few updates on the state of the consumer, with Conagra Brands (CAG), Levi Strauss (LEVI), and Constellation Brands (STZ) all set to report results.
Last week, markets capped off an eventful first quarter of the year with all three major U.S. stock indexes logging gains in the year's first three months, punctuated by a 16% rally in the tech-heavy Nasdaq after the index fell nearly 30% in 2022.
As Yahoo Finance's Jared Blikre noted on Friday, many of the megacap tech names that served as market leaders in the years before the pandemic again featured as stars in Q1.
Shares of Facebook and Instagram parent company Meta Platforms (META) gained more than 75% in the year's first three months while shares of Tesla (TSLA) gained a robust 68%. Bitcoin (BTC-USD) also rose nearly 70% in the first quarter as the spirit of a risk-on market led by technology crossed asset classes.
A strong performance in some pockets of the market, however, doesn't ease the pain for the banking sector as three U.S. banks failed in March and stocks across the industry were pummeled.
The KBW Bank Index (^BKX) fell 25% in March while the KBW Regional Bank Index (^KRX) fell 20% during the month.
As markets gain some distance from the most acute phases of the bank crisis, a growing view among Wall Street strategists and economists is that this event will prove to be binary — either we crash into recession and a new bear market or stocks continue to rally.
"[If] SVB was Bear Stearns we [are] going to new lows," wrote Bank of America strategist Michael Hartnett in a note on Friday, "if LTCM then we [are] going to new highs," referencing the collapse of hedge fund Long-Term Capital Management in 1998 that created a global bank crisis but did not disrupt the tech bubble.
Neil Dutta, chief U.S. economist at Renaissance Macro, wrote in a note last week, "There is no middle ground in [a] banking crisis, it either happens or it doesn't. This means the bond market is either pricing in too many rate cuts or not enough."
In Dutta's view, a big risk for markets in the months ahead will be a U.S. economy that merely hangs in there.
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