US stocks are expected to face a volatile week as Wall Street awaits a key government jobs report expected to show unemployment at elevated levels.
The US government will release the employment report for last month on Friday, with most analysts expecting last month’s non-farm payrolls to fall by 87,000 and the unemployment rate to edge up to 9.6 percent from 9.5 percent at present.
“With a lot of expectations riding on the employment data, it would not be a surprise to see the market trade in a choppy manner leading up to its release,” analysts at Briefing.com said in a report.
Unemployment remains the biggest concern of US President Barack Obama, who is facing an uphill battle to lift the fortunes of his Democratic Party in congressional elections in November.
The latest government data on Friday showed the economic growth rate easing to 2.4 percent in the second quarter from a revised 3.7 percent in the first three months of the year, stoking fears that recovery from recession is losing steam.
Over the week, the blue-chip Dow Jones Industrial Average rose 0.4 percent to end Friday at 10,465.94.
The information technology-rich NASDAQ composite index fell 0.7 percent to 2,254.70, while the broader S&P 500 index slipped 0.1 percent to 1,101.60.
But the indexes put up a superb performance last month, with the Dow skyrocketing 7.1 percent — its heftiest monthly gain in a year, the NASDAQ index up 6.9 percent and the S&P 500 also adding 6.9 percent — its best monthly rally since July last year.
Second-quarter company earnings news and economic data are expected to continue moving the market in the week ahead.
“Indicators next week will confirm that the economy started the third quarter with further diminished momentum,” IHS Global Insight economists said in a report.
Aside from the employment data, the closely followed ISM manufacturing index is expected to slide down slightly, while the ISM services index may remain unchanged for July, they said.
Construction spending is also expected to end the second quarter on a downbeat note while real consumer spending just barely chinned the bar in June.
“Recoveries going forward will likely be jobless and we will need a longer, broader based expansion before job growth accelerates sharply,” chief economist Joel Naroff of Naroff Economic Advisors said.
“It is doubtful that business and residential investment, state and local spending and inventory rebuilding will continue to be as robust as they were in the spring,” he said, forecasting third-quarter growth at below 2 percent.
Government revisions on previous quarter GDP data showed on Friday that the recession that struck in December 2007 was deeper than previously thought, with the worst economic contraction at 6.8 percent in the final quarter of 2008.
Obama admitted more work needs to be done, but stressed the economy was on the right path, pointing to four consecutive quarters of growth.
“Our economy is growing again instead of shrinking. And that’s a welcome sign compared to where we were,” he said on Friday.