Market May Regain Its Balance on Data

The U.S. stock market, after being tossed recently like a sailboat in a squall, might regain some stability this week, having already discounted the government’s move to break up Microsoft Corp. and started to take on board the possibility of a half-percentage-point increase in interest rates in May. Late Friday, the U.S. Justice Department and 17 states formally proposed splitting the software maker into two companies--a proposal that had been rumored for days. Analysts say simply knowing the government’s recommendation supplied investors with a measure of certainty after weeks of anticipation. After-hours activity indicated that Microsoft’s stock might even get a modest boost this week. The stock, which had closed at $69.75 on Nasdaq, jumped to $71.94 in the hour after regular U.S. trading had ended for the week.

Monthly U.S. employment data due Friday might also help clear the air. While a robust increase in nonfarm payrolls is forecast by economists, the jobs report might only confirm what an increasing number of observers already are betting on--an end to the Federal Reserve’s gradualist approach of steady quarter-point rate hikes. The fresh data, they believe, could reinforce the notion that the Fed will opt for the stronger medicine of a half-percentage-point rise at its next policy-making meeting, on May 16. Economists polled by Reuters expect the economy to have produced an average of 358,000 new jobs in April and an unemployment rate of 4%.

Other economic data this week:

* Figures due out Thursday on worker productivity might point to a shift to more modest improvements. Productivity probably grew at a 3.5% annual pace in the first quarter, down from a 6.4% yearly rate during the fourth quarter and a 5% annual rate in the third quarter, analysts told Bloomberg News.

* Manufacturing probably stayed on a growth path. The National Assn. of Purchasing Management is expected to report today that its index of factory orders, production and hiring registered a reading of 55.5 for April. In March, the NAPM index was 55.8.

* The index of leading economic indicators, the Conference Board will report Tuesday, probably rose 0.1% in March after declining 0.3% in February, analysts said. The Conference Board is scheduled to issue the LEI on Tuesday.