The latest US jobs data will take centre stage this week as investors refocus on the state of the economy as they refine their bets on when the Federal Reserve will start to lift interest rates.
There is the ADP employment report on Wednesday, weekly jobless claims on Thursday, and the government's nonfarm payrolls data on Friday. The latter is expected to show US added more than 200,000 jobs for a 12th consecutive month in February.
"Economic data will be the biggest driver of market moves over the next month, and the key one is the jobs report," Jim McDonald, chief investment strategist at Chicago-based Northern Trust Asset Management, told Reuters. "Right now, there continues to be a reasonable amount of scepticism regarding the market outlook."
US Federal Reserve chair Janet Yellen last week told Congress that economic conditions probably won't warrant an interest rate increase for at least the next couple of meetings. She also pointed out that wages remain a cause for concern.
"Considerable progress has been achieved in the recovery of the labour market, though room for further improvement remains," Yellen told Congress. "The labour force participation rate is lower than most estimates of its trend, and wage growth remains sluggish, suggesting that some cyclical weakness persists."
Investors will eye fresh clues on the outlook rates in Yellen's speech on Tuesday evening in New York. Other Fed officials scheduled to speak this week include Chicago Fed President Charles Evans, Kansas City Fed President Esther George, and Dallas Fed President Richard Fisher, on Wednesday, and San Francisco Fed President John Williams on Thursday.
Any rate increase will be "fairly slow and measured," Todd Hedtke, vice president at Allianz Investment Management, told Bloomberg. "There isn't a really strong push from inflation. Employment is clearly fine, but wage growth is still a bit of a question mark."
While the Fed is looking at lifting borrowing costs, on Saturday the People's Bank of China lowered benchmark interest rates for the second time in three months in an effort to stoke inflation and a slowing economy.
China's central bank cut its one-year deposit rate by 25 basis points to 2.5 percent and the one-year lending rate by a quarter percentage point to 5.35 percent, both effective on March 1. The change comes days before the annual meeting of the National People's Congress, at which the government will set its political agenda for the year ahead.
Not to be overshadowed, the Bank of Canada, the European Central Bank, and the Bank of England are all scheduled to hold policy meetings this week.
On Friday, the Dow Jones Industrial Average fell 0.45 percent, while the Standard & Poor's 500 Index slid 0.30 percent, and the Nasdaq Composite Index declined 0.49 percent after a report showed the US economy's growth slowed in the fourth quarter. Friday's declines pushed two indices in the red for the week, with the Dow 0.04 percent lower, and the S&P 500 0.27 percent weaker. The Nasdaq posted a gain of 0.15 percent for the week.
The Commerce Department report released on Friday showed the US economy's annual rate of expansion slowed to 2.2 percent in the fourth quarter, down from a 2.6 percent estimate last month, and down from the third-quarter's 5 percent pace.
Still, it was not all disappointment.
"The composition of growth is looking much better, we are setting up for a solid quarter for the economy," Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania, told Reuters. "The first quarter is still work in progress."
Overall the month of February was a strong one for equity markets in which both the Dow and the S&P 500 set fresh record highs, while the Nasdaq moved closer to its record.
The S&P 500 advanced 5.5 percent last month, while the Nasdaq Composite increased 7.1 percent bolstered by gains in Apple.
Other US data due this week include the PMI and ISM manufacturing indices, personal income and outlays, and construction spending, due today; motor vehicle sales, due Tuesday; PMI services index, ISM non-manufacturing index, and the Beige Book, due Wednesday; chain store sales, productivity and costs, and factory orders, due Thursday; and international trade, and consumer credit, due Friday.
In Europe, the Stoxx 600 Index ended February with a 6.9 percent advance for the month. Germany's DAX closed at a record high on Friday, pushing its gains for 2015 so far to 16.3 percent.