Debt, Job Worries Linger in Coming Week

Updated from 02/07/10

Update includes Treasury Secretary Timothy Geithner's statement that the U.S. will never lose its pristine credit rating.

NEW YORK (TheStreet) -- The coming week is light on big economic reports, which will likely give traders time to review the big data points of the past two weeks, as the Dow hangs on to the psychologically significant 10,000 level by a thread.

Friday's session was a fitting close to a week characterized by conflicting views about the recovery coming from macroeconomic reports and uncertainties coming both from abroad and from Washington. Markets initially took the January nonfarm payrolls report in stride, selling off moderately in the face of 20,000 job losses, but a slightly better unemployment rate of 9.7%.

Stocks then sold off sharply in the afternoon session, with the Dow losing 167 points at its nadir. But the major indices started climbing toward positive territory in the final hour of trading, closing with modest gains.

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The coming week's lineup of economic and earnings releases lack the same attention-grabbing potential of the nonfarm payrolls report or other economic releases from the past two weeks, such as the fourth-quarter GDP report and January nonfarm payrolls -- both of which were released amid a flurry of high-profile earnings results from companies like UPS(UPS), Visa(V) and Cisco Systems(CSCO).

That will give the market plenty of time to linger on percolating fears about how debt-laden countries like Greece, Spain and Portugal will fund their deficits and how the U.S. will achieve a sustainable recovery with so many people still out of work and hesitant to spend. Magnifying these underlying fears are uncertainties regarding government regulations on the financial industry and concerns that global markets can no longer count on China to lead the way to recovery, since it is trying to rein in its rapid growth.

"I think this week has been pretty traumatic between the softening employment numbers and the issues in Europe regarding the financial health of some of the countries there. Those worries are going to persist into the next week," said Peter Tuz, president of Chase Investment Counsel, a Charlottesville, Va.-based money manager.

Thursday's fears about European sovereign debt and the Labor Department's report showing another 8,000 applications for unemployment benefits led investors to rush into safer assets, roiling global stock markets. Crude oil futures also fell and the Dow briefly slipped under the 10,000 mark in its biggest single-day drop in more than nine months.

Over the weekend, Treasury Secretary Timothy Geithner said that the government would never lose its pristine credit rating even as it runs large deficits. He said global investors would always seek the safe haven of U.S. Treasuries in times of crisis.

Also over the weekend, Group of Seven finance ministers said they remained committed to coordinated stimulus as the global economy continues to recover. Their statement came after a two-day meeting in Canada. European officials at the meeting reportedly said they were monitoring the debt situation in some of the weaker euro-zone economies.