By Caroline Valetkevitch
NEW YORK (Reuters) - If hiring picked up in March at a healthy pace, that could convince U.S. stock investors next week that the economy's recent setbacks caused by the weather were only temporary.
Friday's monthly jobs report, the most widely watched U.S. economic indicator, is expected to show that nonfarm payrolls added 200,000 jobs in March, according to a Reuters poll of economists.
The rebound in hiring started last month despite the icy weather. Employers added 175,000 jobs to nonfarm payrolls in February after creating 129,000 new positions in January.
Wall Street will get more data on the broader economy next week as well.
The Institute for Supply Management will release its national surveys for March on the manufacturing and services sectors, which are expected to show improvement from the previous month as well.
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Rosier data could confirm for investors that recent weakness in economic data was caused by the winter's harsh weather, suggesting the U.S. economy's uptrend is intact.
Improvement in the labor market, along with a pickup in the manufacturing and services sectors, could also bolster the case for the Federal Reserve's scaling back of economic stimulus and put more focus on the timing of when the central bank will begin raising interest rates.
Job growth would be a plus for the market, which has suffered a bout of volatility as some of the most high-flying shares, including biotechs, have tumbled in the past week.
"We potentially could have a big positive surprise. The polar vortex is over, and I believe we could get a snapback in payroll numbers that is significantly better than expected," said Doug Cote, chief market strategist at ING U.S. Investment Management in New York.
Car sales for March will be released next week, along with ADP's private-sector payrolls report for March and data on the U.S. international trade deficit for February.
Investors are anxious to get a look at more trade data after China's weak export numbers earlier this month underscored worries that the world's second-largest economy is slowing.
TECHS MAY EXTEND SLIDE
The recent selloff in biotech and other recent big gainers could persist, strategists said, although so far it has not eroded the market's bull run. Investors have been putting money into utilities and other sectors.
The Nasdaq biotechnology index fell 7 percent for the week. With just one trading day left in March, the Nasdaq biotech index was down about 13 percent for the month at Friday's close.
"There's definitely been rotation out of tech in terms of asset flows, and energy and utilities have been growing," said John Kosar, director of research with Asbury Research in Chicago.
For the week, the S&P utilities sector index rose 1.2 percent and the S&P energy index climbed 2.5 percent.
In another potential headwind for the stock market, Moody's put Russia's government bond rating on review for a downgrade late Friday.
FIRST-QUARTER WARNINGS DOMINATE
More U.S. companies could issue outlooks for the upcoming reporting period. So far, negative outlooks have surpassed positive ones from S&P 500 companies by a ratio of 6.9 to 1 for the first quarter, Thomson Reuters data showed.
That's still lower than the ratio for the fourth quarter, but the high number of negative outlooks has driven profit estimates down for the first quarter.
S&P 500 first-quarter earnings growth is now expected to increase just 2.1 percent, down sharply from a January 1 growth estimate of 7.6 percent, the Thomson Reuters data showed.
Among companies that have already reported earnings, FedEx said severe winter conditions hurt results. FedEx cut its fiscal-year profit forecast.
Monsanto is due to report earnings next week, along with Micron Technology . But the earnings season won't get under way until April 8, when Alcoa is scheduled to report results.
"You'll start to have companies giving you an indication of how the quarter looked," said Dan Veru, chief investment officer of Palisade Capital Management LLC in Fort Lee, New Jersey, which oversees $4 billion.
(Reporting by Caroline Valetkevitch; Editing by Jan Paschal; For the U.S. stock report, click on <.N>)