Fear an amazing February jobs report.
If non-farm payrolls blow by 200,000 and average hourly earnings growth quickens from the 2.9% pace seen in January, stocks could tank on inflation fears. With inflation fears comes the specter of faster interest rate hikes by the Federal Reserve, which we learned in early February the market hates.
Should stocks take a beating, it will be the hot tech names such as Netflix (NFLX - Get Report) and Action Alerts Plus holding Amazon (AMZN - Get Report) that take a hit the first. Not helping the cause of tech investors are rich valuations.
For example, U.S. software sector valuations previously peaked at 6.3 times in March 2014 on an enterprise value to sales ratio, and again at 6.3 times in June 2015, according to UBS. The group has now broken through that level, at an average multiple of 6.7 times currently.
How can one not think cautiously into the jobs report. By and large, sentiment on the market has fully recovered after February's surprise correction.
"With the jobs report expected to come in very strong tomorrow and with confidence high for both consumers and business, people feel good and see no real troubles ahead," says Brad McMillan, chief investment officer for Commonwealth Financial Network.
Now On TheStreet
Former U.S. Labor Secretary Robert Reich hops on with TheStreet to preview the jobs report. Watch below.