Wall Street enters a new week and quarter on Monday with stocks at or close to all-time records. Equities have shown remarkable resilience since the U.S. presidential election last November as investors placed bets the Trump administration would introduce business-friendly tax reform and infrastructure spending.
The Dow Jones Industrial Average ended last week a little more than 450 points from its all-time closing high of 21,115.55 set on March 1. The S&P 500 was just 28 points, or a 1.4% increase, from its record close of 2,395.96 set on the same day. The Nasdaq closed just under its record of 5,914, set on March 30, on Friday afternoon.
But some analysts grow concerned over the potential rockiness ahead given high equity valuations and a Trump White House fraying at the edges. Donald Trump and the Republican-led House showed their fallibility in March after failing to rouse support for their unpopular health care bill.
"Equities are very overvalued: On price-to-sales basis, the S&P 500 index is as expensive as it was at the peak of the internet bubble," Vincent Deluard, vice president of global macro strategy at the BD Division of INTL FCStone Financial, told TheStreet. "You could justify high valuations by low yields before the election ... But now growth expectations are falling and getting things done in D.C. seems as difficult as always."
Deluard added: "Maybe the market is slowly topping; breadth is deteriorating. Defensive sectors are leading. Momentum is weakening. Strong flows can keep the rally alive for a few months, but you will need some fundamental improvement to sustain the gains."
A post-election rally has lost momentum, particularly after Trump and Republicans failed to repeal and replace Obamacare as promised on the campaign trail. House leaders pulled the unpopular health care bill on March 17 when Trump and House Speaker Paul Ryan couldn't secure enough votes for passage. Trump had based his campaign message on his brand as a businessman and dealmaker.
The U.S. jobs report for March, to be released Friday, dominates a busy week of economic data. It will likely be another month of strength in the U.S. labor market with 174,000 jobs expected to have been added to the economy. The unemployment rate is estimated to have held at 4.7%, while wages are anticipated to have climbed 0.3%.
Other readings on the labor market include the ADP National Employment Report for March -- the unofficial reading on private payrolls ahead of the official U.S. jobs report -- on Wednesday and weekly jobless claims at their regular time on Thursday.
Investors will get the rundown of what went on behind closed doors during the Federal Reserve's March meeting when minutes are released on Wednesday afternoon. At that meeting, the central bank decided to raise the federal funds rate by 25 basis points, the third interest rates increase since 2008. The decision was near unanimous with only one dissenter. The Fed also forecast two more rate hikes in 2017, in line with its previous forecasts and as markets have anticipated.
The manufacturing sector will go under the microscope in the coming week. The PMI Manufacturing Index and ISM Manufacturing Index for March, and construction spending for February will be released throughout Monday morning, while factory orders for February are scheduled for Tuesday.
Also on the economic calendar: International trade for February is set for Tuesday, and the ISM Non-Manufacturing Index and PMI Services for March on Wednesday.
On the earnings calendar in the coming week: Conn's (CONN) , Acuity Brands (AYI) and Hudson's Bay (HBC) will report on Tuesday; Bed, Bath & Beyond (BBBY) , Monsanto (MON) , Walgreens (WBA) and Yum! China (YUMC) on Wednesday; and Carmax (KMX) , Constellation Brands (STZ) , Fred's (FRED) , PriceSmart (PSMT) and WD-40 (WDFC) on Thursday.