LOS ANGELES (MarketWatch) � U.S. stocks have shined this year, but investors may find a reason to book gains next week if labor-market figures prove a disappointment, analysts say.
�It�s all jobs, all week. Jobs, jobs, jobs will dominate,� action on Wall Street, said Mark Lamkin, chief investment strategist at Lamkin Wealth Management, in Louisville, Ky.
Click to Play U.S. week ahead: UnemploymentMarkets will focus on Friday�s jobs report and unfolding events in Europe.
The key February unemployment report from the U.S. Labor Department won�t arrive until Friday. But �whisper numbers� that suggest a poor report is in the pipeline, soft figures from weekly jobless claims or discouraging data from ADP�s report on private-sector hiring could trigger a pullback in equities, said Lamkin.
The U.S. equity market will be coming off a notable week. The Dow Jones Industrial Average DJIA �logged its first close above 13,000 since May 2008. The blue-chip index also marked its fifth consecutive month of advances as it closed February higher by 2.5%. The S&P 500 Index SPX �rose 4.1% last month � its third straight monthly win � and the Nasdaq Composite COMP �broke above the 3,000 level for the first time since December 2000. Read more in Friday�s market snapshot.
A view of labor market conditions will also come on Monday through the February services-activity report from the Institute for Supply Management and the Commerce Department�s report on factory orders in January.
�Manufacturing is where we need to see some labor pickup,� said Keith Springer, president of Springer Financial Advisors, in Sacramento, Calif. �It�s one thing to get a job in the services industry, but it�s another thing if factories are starting to hire if orders are picking up.�
Unless there�s �blowout� number for the nonfarm payrolls report on the upside, said Lamkin, �I think the easy money has been made and a decent number has been factored in.�
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Wall Street analysts early this year had largely projected total return on the S&P 500 Index at 8% to 12% for the year, he noted.
The S&P 500�s total return is now over 9%, according to Standard & Poor�s. With those gains coming so quickly, �people are going to take profits.�
�But we are already at 8%, 9%, so people are going to take profits.�
Economists polled by MarketWatch currently expect the U.S. economy to have added 213,000 jobs last month, and the unemployment rate to stay at 8.3%. January�s jobs report easily outstripped expectations with the addition of 243,000 jobs and a slip in the unemployment rate to 8.3% from 8.5%, with job growth in nearly every sector. See MarketWatch's economic calendar.
The �ongoing decline� in U.S. claims for unemployment insurance �sets the economy up for a 240,000 rise in private payrolls in February,� said analysts at Barclays Capital Research to clients, adding they expect the unemployment rate to slip to 8.2%.
With strengthening but still fragile labor-market conditions, investors will also look for reads on consumer spending in quarterly results from specialty retailers Aeropostale Inc. ARO , Men�s Wearhouse Inc. and Zumiez Inc. ZUMZ �. Reports are also due from tax-preparation services provider H&R Block Inc. HRB �and power-plants operator Dynegy Inc. �. Read more in Stocks to Watch for Monday.
Consumer spending remains a concern for Wall Street, particularly as retail gasoline prices have climbed each day for more than 30 past days. Prices have surged past $4 a gallon in some parts of the country, such as California. Read about the rise in retail gas prices in Commodities Corner.
�We�re on the precipice of changing consumer spending habits,� with $4 a gallon gas already a reality for millions of drivers, said Lamkin. Weaker consumer confidence and spending �could derail this market.�
Some analysts point to the rise in gas prices as stemming in part from the recent rally in crude futures, largely because of worries about potential supply disruptions from Iran. Oil on Thursday spiked past $110 a barrel following Iranian reports about a pipeline explosion in Saudi Arabia. Saudi Arabian officials said the reports were untrue.
Three weeks of gains were snapped on Friday, with oil for April delivery �ending down 2% at $106.70 a barrel on the New York Mercantile Exchange. Read more on oil futures.
Equity and oil market players are likely to assess a speech this weekend by President Barack Obama on Iran�s nuclear ambitions and U.S.-Israel relations. On Monday, President Obama and Israeli Prime Minister Benjamin Netanyahu will meet at the White House. Read analysis of oil market walking �Iran�s tightrope.�
Concerns �that mounting tensions over Iran will spill over into action,� may have fueled Friday�s �strong bid in risk-free assets,� such as Treasuries, Richard Gilhooly, an interest-rate strategist at TD Securities, told clients Friday. Read more on bonds.
Ahead of the Friday�s jobs report, Federal Reserve Chairman Ben Bernanke last week noted during congressional testimony the improvement in the labor market. Equities had moved lower as many market players interpreted his comments as a hint to not to expect a third round of quantitative easing to aid the U.S. economy.
Springer disagrees with that view. �[Bernanke] knows� recent improvement in the overall economy has been driven by the second round of quantitative easing, �and once this wears off, the economy sinks again. He wants to be ahead of the curve.�
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