Here are the 3 big things we’re watching in the stock market in the week ahead
The stock market enters next week battered and bruised by the war in Iran. In the coming days, weary investors will also have to deal with new jobs data and a few stragglers on the earnings front, including the Nike Club. Conflict in the Middle East will continue to be the dominant driver of market movements. Let’s take a closer look at other important events on our radar. 1. Jobs, jobs, jobs: We could be in for a volatile week. Investors will sit on the edge of their seats and tune out any Iran-related headlines as they wait for the nonfarm payrolls report to be released before the bell on Friday. The question everyone is trying to answer: Was February’s 92,000 job losses just a blip or the start of something much more troubling, like stagflation? Stagflation is the term used to describe an environment where there is rising inflation as well as rising unemployment. This dynamic is a real problem for the Federal Reserve’s dual mandate of price stability and full employment. A pickup in inflation means the central bank must raise interest rates. But the rise in job losses means interest rates need to be cut to stimulate growth. Nothing causes inflation like oil because it represents a large, unavoidable input cost. As long as the war in Iran continues and the Strait of Hormuz remains effectively closed, we are unlikely to see a meaningful decline in oil prices. This means inflation risks are real, as are broader risks to economic growth. Not a great combination for stocks. Besides war, another problem in the market is the disruptions caused by the adoption of artificial intelligence. As Friday’s software sales related to Anthropic’s new Mythos model show, investors are still nervous about the potential negative side effects of artificial intelligence. As investors pore over employment data next week, the goal is to gain at least a little more clarity about the direction of the economy and the Fed’s next moves. Labor market updates begin Tuesday with the release of the February Jobs and Labor Turnover Survey. The report, called JOLTS, will be followed by the ADP special employment report for March on Wednesday morning and the regular weekly jobless claims report on Thursday. The main event, of course, is Friday’s March nonfarm payrolls report. Remember: The US stock market is closed on Friday for Good Friday, so we won’t be able to see investors’ real-time response to the data. JOLTS is important because it provides insight into the tightness of the labor market by analyzing the number of jobs opened, the hiring rate, and the turnover rate of employees. It is generally a lower priority than ADP data and the government jobs report. Plus, JOLTS is another month in the rearview mirror (it covers February, not March), so take this with a grain of salt. But this time it may help us understand what caused 92,000 people to lose their jobs in the labor market in February. The second most important employment data is payroll processor ADP’s employment survey. Unlike the JOLTS report, survey reports show actual job increases and decreases by both industry and business size. While the ADP is not a perfect proxy for the official government report, it is often used as a read on what Friday morning will bring. This brings us to arguably the most important monthly economic publication, the nonfarm payroll report. February’s disappointing data increases the urgency of this update. Economists surveyed by FactSet expect to see 60,000 new jobs in March as of Sunday. Ideally, job gains will at least meet expectations. However, in this period when the fear of stagflation prevails, it is indisputable that adding any amount will be a gain. This will give the Fed some more breathing room to wait and see how the Middle East conflict plays out. Another thing to watch is revisions to the February data as the Labor Department takes into account late survey responses. 2. Other economic data: Outside of business, we will give two checks to the consumer. First, we’ll see the Conference Board’s latest consumer confidence data on Tuesday morning. The next day, the Commerce Department will release its February retail sales report, which economists expect to show a 0.5% monthly increase, according to FactSet data on Sunday. We’ll also get a look at the state of manufacturing activity on Wednesday when the Institute for Supply Management’s March manufacturing index is released. ISM’s February manufacturing PMI showed little change compared to the previous month at 52.4, indicating a moderate expansion. The consensus for March is 52.3, according to FactSet. Economists expect a moderate decline (56.1 to 54.8) starting in February, according to FactSet, while the ISM’s monthly check on services activity will end on Friday. 3. Nike earnings: The only Club name to report next week will be Nike on Tuesday night. We don’t expect much this quarter, especially in terms of the struggling China business. Its 17% decline in revenue was such a black eye on its previous earnings report that the market didn’t even care about the green shoots in North America. We expect to see additional momentum at least in North America, which has been the initial focus of CEO Elliott Hill’s recovery efforts. Last quarter, sales in this market were better than expected, up 9%, and profitability recovered slightly in the face of tariff pressures. The stock limped into Tuesday’s report, falling 17% since the war began. Investors are understandably concerned about stagflation, which is dealing a blow or two to consumer spending. Unfortunately, Nike can’t open the Strait of Hormuz on its own, so we’ll be paying close attention to the things it can control: its own costs. The more efficient the company can become now, the better positioned it will be to rebound earnings when the operating environment improves. We still have faith in Hill, who takes over as CEO in late 2024. But we have enough shares for now. We took a position believing that the transformation could take up to a year. Autumn will be a year; If it doesn’t change by then, we’ll have no choice but to reboot the name and make room for something better quality. Next week, Monday, March 30 After the bell: ARKO(ARKO), Anadarko Petroleum (APC) Tuesday, March 31 10 a.m. ET: Bureau of Labor Statistics’ JOLTS Report 10 a.m. ET: The Conference Board’s Consumer Confidence Survey. Before the bell: McCormick (MKC), FactSet (FDS), TD SYNNEX (SNX) After the bell: Nike (NKE), nCino (NCNO) Allied Gold (AAUC), Dave & Busters (PLAY), PVH (PVH) Wednesday, April 1 8:15 a.m. ET: ADP Employment Survey 8:30 a.m. ET: Department of Commerce Retail Sales Report 10 a.m. ET: ISM Manufacturing PMI Before the bell: Lamb Weston (LW), Conagra (CAG) Thursday, April 2 8:30 a.m. ET: Labor Department’s Initial Unemployment Claims After the bell: Acuity (BEAR) Friday, April 3 U.S. stock market closed for Good Friday 8:30 a.m. ET: Bureau of Labor Statistics’ Nonfarm Employment Report 10 a.m. ET: ISM Services PMI (Jim Cramer’s Charitable Trust long-term) NKE. See here for a full list of stocks.) When you subscribe to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trading alert before buying or selling a stock in his charitable foundation’s portfolio. 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