Wall St week ahead: Jobs data could spur Fed action on stimulus
NEW YORK (REUTERS) - Wall Street is bracing for a wave of economic reports this week, including the August jobs report, which might prove decisive in determining whether the United States economy is strong enough for the Federal Reserve to dial back its bond purchases in mid-September.
Anxiety about the Fed's possibly reducing its US$85 billion (S$108 billion) monthly stimulus, also known as QE3, has hurt the stock market, which recorded its steepest monthly fall since May 2012. But the stock market's greater anxiety, which has developed in recent weeks, is that the Fed will press ahead with a reduction in support, even as the economy remains fragile.
The recent data has failed to provide evidence of the convincing growth the Fed says it wants to see. Until then, stocks will benefit from the cheap money resulting from the Fed's bond purchases.
This week's "data should make or break the September expectations", said Mr Mike O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. A strong jobs report will likely reinforce the view the Fed will opt to decrease its bond purchases at its Sept 17-18 meeting, while a weak one would do the opposite, analysts said.