US economic data could set markets on upward course
The US employment report for March and other key economic numbers due out next week could help US stocks resume their recent winning path as long as that data hits the sweet spot: Not strong enough to add to worries about further interest rate hikes, yet not weak enough to cause concern about a recession.
Reports on the housing market could also draw investors' attention given recent sharp gains in homebuilder stocks.
After a bruising start to the year major indexes remain well above their 2016 lows, thanks to evidence of a reviving economy and a sharp rebound in oil prices.
While the volatility that marked the start of the year has diminished and many strategists have adopted a cautiously optimistic outlook, the market seems to have paused.
A catalyst could come from corporate earnings.
"What we've seen over the past couple of weeks is really just a return to normal," said Brad McMillan, chief investment officer for Commonwealth Financial in Waltham, Massachusetts.
Stocks' next big move will largely depend on earnings, he said. "We're kind of in a show-me phase, and it's got to be earnings."
First-quarter earnings estimates have collapsed since the start of the year, and in some cases may have fallen too far, possibly setting the stage for an upbeat profit season, McMillan and other market watchers said. The first weeks of 2016 were among the most turbulent ever on markets, but the effect on businesses is not yet clear.
Analysts expect a first-quarter earnings decline of 6.9pc - which would be the biggest drop since 2009.
Stabilising oil prices could at least slow the rate at which future earnings estimates fall, McMillan said. (Reuters)