Jobs Growth Heats Up

Friday's data will put to the test a theory that the bulls were hoping for a weaker jobs report. "The big issue is inflation," NYSE floor trader Gordon Charlop of Walter J. Dowd Inc. said in an interview on TheStreet.com TV Thursday. "The Fed chairman has made that abundantly clear. Unless he gets data showing that it's under control, it's a negative for the market, so weaker data is positive for the market."

Despite such sentiments, Tuesday's rally came amid positive news on housing and retail sales, suggesting good news really is "good" for stocks given recent concerns about the outlook for economic and earnings growth.

"We don't think stocks need the false elixir of Fed rate cuts to move higher," writes Michael Darda, chief economist at MKM Partners, who has been resolutely upbeat about the economy. "While weather likely impacted the data during the last two months, the three- and six-month moving averages for nonfarm payroll growth of 152,000 and 164,000, respectively, show that underlying trends remain intact and that the unemployment rate likely will remain low or fall further. This should allow wage and income growth to continue to underpin household consumption."

As a result, "we continue to favor equities over Treasuries and growth-based sectors over defensive positions." he writes.

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