Investors to Take Cues From Economic Data

Investors are looking ahead to the week's economic data for signs that the U.S. economy is still on track to grow at a moderate pace.

A pair of reports from a private group will gauge the manufacturing and services sectors of the economy, while monthly payroll data comes out at the end of the week when the stock market will be closed in observance of the Good Friday holiday.

The bond market, however, will remain open for an abbreviated trading session. The Securities Industry and Financial Markets Association has recommended an early close at 10:30 a.m. (1430 GMT), on Friday, April 6, for trade in U.S. dollar-denominated fixed-income securities.

Although the first quarter of 2007 brought some anxious moments, major stock market indexes were little changed in the final tally for the three-month period.

For the week, the blue-chip Dow Jones industrial averagelost 1.02 percent, the Standard & Poor's 500 indexdeclined 1.07 percent and the Nasdaq Composite fell 1.11 percent.

For the quarter, the Dow industrials fell 0.9 percent. The S&P 500 rose 0.18 percent and the Nasdaq Composite rose 0.26 percent.

Economic Gloom vs. Boom

Despite widespread nail-biting over subprime mortgage lending, some market participants are arguing that when you look beneath the surface, there is little real reason to be gloomy about the economy.

The Institute for Supply Management will issue a report on Monday showing activity in the manufacturing sector. The median forecast in a Reuters poll calls for the index to slip to 51.1 in March from 52.3 in February.

On Wednesday, the ISM will report on the non-manufacturing, or services, sector. The Reuters poll shows a median forecast of 55.0, an increase from from 54.3.

Also on Wednesday, employment consultants Challenger Gray & Christmas will have data on planned layoffs.

The group's report for February showed a 33 percent increase to 84,014. That same day, ADP Employer Services issues its employment report, which some on Wall Street take as a guide to the government data that comes out two days later.

According to a Reuters poll, the consensus forecast for non-farm payrolls is a rise of 120,000 jobs, compared with the February increase of 97,000.

Tim Hartzell, chief investment officer at Kanaly Trust Co. in Houston, notes that economists like to see the number stay above 100,000. But he adds that there has been a tendency for the monthly reports to include upper revisions to prior data.

"Non-farm payrolls have consistently been revised higher on a one-, two- and three-months-later basis," Hartzell said.

The jobless rate is expected to rise to 4.6 percent from 4.5 percent, according to a Reuters poll.Neil Hennessy, portfolio manager and president of the Hennessy Funds in Novato, California, says that in view of the millions of jobs that have been added to the U.S. economy over the last several years, whether the jobless rate edges up to 4.6 percent or stays the same makes little difference.

Other data during the week includes domestic car and truck sales on Tuesday, as well as pending home sales. Friday's menu of data includes consumer credit and wholesale inventories.

Earnings May Surprise

The week's calendar of corporate earnings announcements remains on the thin side, with activity picking up the following week.Although many analysts expect the first-quarter reports to see earnings growth rates slip into the single digits, Hartzell looks for a continuation of double-digit increases.

"We actually think it will surprise on the upside," he said. "Share buybacks will continue to increase earnings per share so that we will still have double-digit increases for the first quarter."Electronics retailers Best Buy Co. Inc. and arch-rival Circuit City Stores Inc. are due to report quarterly earnings on Wednesday.

Circuit City has already announced it was cutting 3,400 in-store sales jobs. The move requires certain termination expenses but is aimed at reducing costs down the road.

Chip-maker Micron Technology Inc., which has been hurt by falling memory chip prices, also reports quarterly earnings on Wednesday, as does agricultural biotech company Monsanto Co..Wine and spirits company Constellation Brands Inc. reports results on Thursday.