NEW YORK (TheStreet) -- Stock traders will play catch-up Monday as the market digests Friday's weaker-than-expected employment report.

Then all eyes will turn to first-quarter earnings season, which officially kicks off after the bell Tuesday with


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On Friday, the government announced that nonfarm payrolls

increased 120,000 in March

, far short of the 200,000 gain that economists had been expecting.

The stock market was closed in observance of Good Friday. But in what could be a preview of Monday's action, stock futures slumped on the news.

At the CME,

Dow Jones Industrial Average

futures closed down 131 points, or 1%, at 12,847 after hitting a low of 12,837 following the weak jobs report.

S&P 500

futures closed at 1375, down 15 points or 1.1%, after sliding as low as 1372.50.

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Although the increase in March payrolls marked a significant decline from the 246,000 average for the preceding three months, some economists said it was likely a hiccup rather than a significant change in labor-market trends.

Paul Ashworth, chief U.S. economist at Capital Economics, said the modest March increase was "payback" for gains in January and February due to unseasonably warm weather.

"Admittedly, the payback is a little bigger than we had expected, but we don't think this is the start of another spring dip in labour market conditions as we saw in 2010 and 2011," Ashworth wrote in a research note. "Even factoring in the March disappointment, the three-month average gain is still 212,000 and we expect employment to continue rising at about that pace over the next few months."

Elsewhere, as earnings season gets underway, traders are bracing themselves for bursts of volatility springing from a macro vs. micro struggle.

Michael Gayed, chief investment strategist at Pension Partners, said "there could be a real tug of war between the bulls who are looking for better earnings on the company level, and the bears who are looking at a potential liquidity vacuum due to macro concerns."

Macro issues include renewed worries about Spain and Greece and the

Federal Reserve's

backing away from QE3, Gayed said.

Sam Stovall, chief equity strategist at Standard & Poor's Capital IQ, says that the markets might have "borrowed a bit too much from the future" and could be in the early stages of a widely anticipated pullback after the S&P 500 total return index reached an all-time high on April 2.

But the decline will be modest, Stovall predicts. Once the retreat is complete, the market may rise to fresh highs given the possibility of earnings surprises. In a recent client note said that first-quarter earnings expectations had been set quite low.

Independent analyst Brian Sozzi is among those approaching the new earnings season with a negative mindset after some below-consensus economic reports and negative forecasts from flash memory firm



and several gold miners.

He remains worried that Wall Street is still overshooting margin and profitability estimates, opening the door to disappointment.

"It's the tendency of analysts to err on the side of optimism and buy into what the company is saying" rather than to add in the impact of macro trends, he explains.

Cautionary macro indicators that Sozzi has identified include the dips in the new-order and export components of the Institute for Supply Management's report on the manufacturing sector's economic activity in March.

They also include the superficially robust, official China Purchasing Managers' Index. Although the index jumped to 53.1 in March, the third month of the year often sees a seasonal jump, and the reading fell short of the 56 level typical for this time of year.

Aluminum producer Alcoa may be the first company to report next week, but Sozzi will be focusing on railroad company


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. It reported earnings misses for two straight quarters but on March 15 projected record first-quarter earnings.

Given the negative surprises from global macro data and industrial companies lately, CSX's results and outlook could be a "great tell" on whether to go against the recent market selloffs or proceed with caution, Sozzi advises.

"I am locked and loaded on CSX instead of Alcoa," says Sozzi.

But Ken Shreve, a


contributor and financial markets commentator, says he tends to take a glass-half-full approach to earnings because there are always bright spots even when expectations are low.

Thomson Reuters

now sees 3% profit growth from S&P 500 companies in the first quarter, down from an earlier estimate of 5.5% on Jan. 1 and 12.8% last July.

"Alcoa will get a lot of play, but I don't consider it that relevant a stock anymore; underperforming badly and questionable fundamentals at best," says Shreve. "I like to focus on innovative firms showing explosive earnings and sales growth. Alcoa falls very short here."

Shreve is expecting a strong report from


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and says both

J.P. Morgan Chase

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Wells Fargo

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continue to have decent technical levels ahead of their results. Overall,

Thomson Reuters

expects 5.9% earnings growth from the financial sector in the first quarter, down from expectations of 7.3% on Jan. 1.

A lot of good news may already be priced into shares of

J.B. Hunt Transport Services

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, but good bottom-line and top-line growth is expected for the company, says Shreve.

Gayed of Pension Partners says that the market has been behaving as if positive surprises are likely in the financial sector and negative surprises are likely in the materials sector, mainly because of concerns about a slowdown in the emerging economies.

Meanwhile, March import and export prices are on Sozzi's watch list following the previous month's uneventful report. Although the market expects fewer signs of inflation in the underlying reports, Sozzi is more concerned, expecting to see some fuel-related bump in the import-price data.

Shreve thinks there's still potential for continued softness in the market.

"Excesses were built up in the first quarter that need to be worked through," he says.

Shreve notes that the "line in the sand" for the S&P 500 is its 50-day simple moving average at 1370, while the Nasdaq Composite's 50-day moving average is at 2980.

He regards the

Nasdaq 100

as a noteworthy index to monitor because several of its components continue to show "uncanny strength," such as


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Intuitive Surgical

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-- Written by Andrea Tse in New York.

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