NEW YORK, Mar 5 (Reuters): Stock investors will focus on the February jobs report next week for clues about the US economy's health and how much higher interest rates may rise.
"A strong payroll report will pretty much seal the fate that there is certainly one and possibly two more rate hikes ahead," said Doug Riley, senior portfolio manager at Boston Advisors, Inc.
In a Reuters poll published Friday, economists forecast that the US economy added 210,000 jobs in February, up from a gain of 193,000 in January. The unemployment rate is likely to hold steady at 4.7 per cent.
Wall Street expects the Federal Open Market Committee, the Federal Reserve's policy-making panel, to raise the fed funds rate by a quarter-percentage point to 4.75 per cent from 4.5 per cent at its March 27-28 meeting.
But this week's spike in the benchmark 10-year US Treasury note's yield to 4.69 per cent, a one-year high, bolstered the perception that the Fed will raise borrowing costs at least one more time after that before ending its credit-tightening campaign. The Fed began raising rates on June 30, 2004, in an effort to curb inflation.
"Rising interest rates are putting a little bit of pressure on the stock market," said Fred Dickson, market strategist at D.A. Davidson & Co.
"Early in the week, I would expect to see the market pull back. But we may see some strength later in the week ahead of the employment report," he added.
Federal Reserve Chairman Ben Bernanke will speak Wednesday to a community bankers' conference. Investors will tune in to see if he gives any hints about when the cycle of rate increases may end. The presidents of the Federal Reserve Banks of St. Louis and Chicago also are scheduled to speak next week.