The stock market gets nervous ahead of Friday's March jobs report

04/03/2013 1:59 pm EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

Some pre-jobs report jitters.

The Labor Department is scheduled to release the non-farm payrolls numbers on Friday. Economists surveyed by Bloomberg are projecting that the economy added 200,000 jobs in March.

That wouldn’t be a great report since economists say that making a significant reduction in the unemployment rate would require something above 250,000 new jobs per month, but 200,000 jobs in March would be enough to reassure investors that the U.S. economy continues to chug along despite the baggage of higher taxes and cuts to government spending enacted by Congress earlier this year.

But…

Today’s release of the ADP jobs survey came in below expectations. The private report, which almost never exactly tracks the government numbers, showed a gain of 158,000 jobs in March when economists had been expecting 200,000 net jobs.

And nerves got stretched a little tighter today when the Institute for Supply Management’s survey of purchasing mangers came in below both the February number and below expectations. The index fell to 54.4 in March from 56 in February. Economists surveyed by Bloomberg had expected a 55 reading on the index. (In this index any number above 50 indicates that the economy is expanding.)

With stock market indexes near all time highs, it’s easy to understand why traders and investors might be nervous about Friday’s jobs report. The rally is predicated on continued growth in company earnings in 2013 and a lower than expected jobs number for March could be an indicator that growth won’t be strong enough to live up to those expectations. (Companies begin to report first quarter 2013 earnings next week. Alcoa (AA) reports on Monday, April 8.)

Unfortunately, while the ISM and ADP surveys are enough to make the markets nervous, they don’t correlate closely enough with the Labor Department’s jobs numbers to give us a solid indication for Friday’s report. The likelihood is that the Friday job numbers will be enough to move stocks but we don’t know enough at this point to say whether it will be up or down.

The forecast is for volatility. And that’s why we’re seeing some money move to the sidelines today.

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