Financial Watch

As we are finally approaching the point where the Federal Reserve will pause in its campaign to slow down the market there seems to be a growing sense of fear on Wall Street. Last week’s chaotic reactions to every bit of news leading up to February’s employment report resulted in a directionless week of trading. Those in the bearish camp are either concerned that inflation is about to spiral out of control or further rate hikes will cause our economy to head into a tailspin. The bulls are not acting too much better either.

Friday’s report that the economy created 243,000 jobs last month came in just where the bulls need it to be. January’s job growth was slightly adjusted downward and average hours dropped negligently. Unemployment ticked up to 4.8% as more people came into the labor markets last month. Overall the report signaled the economy continues on a sustainable path of growth and that there still is room for further employment growth before inflationary pressures are ignited.

Next week will provide us considerable data to take in. Expectations in the first quarter are running very high at this moment. In our opinion, coming data should show that the economy experienced a slower pace of growth in February than it did earlier in the quarter. Further, oil prices are holding steady at $60 leading to expectations that consumer prices will grow at only a moderate pace. Any gains on Wall Street next week should be fairly muted as traders look ahead to Bernanke’s first meeting overseeing the FOMC. If all goes well these next two weeks, we might be on the cusp on a very nice stock market rally. Though there are significant risks if the Fed goes too far.