What to Watch For This Week

Financial markets will have more to think about--and deal with--this week than simply the reverberations from Friday’s employment report:

* Fresh economic data from the government will include the Federal Reserve Board’s “beige book” report on regional economic activity, on Wednesday; and February wholesale and consumer inflation reports, due on Thursday and Friday, respectively. Any more good news about the economy--or bad news on the inflation front--would give beleaguered bond investors more excuses to sell.

* Friday is a “triple witching” day on Wall Street, the once-a-quarter session when stock index futures, index options and individual stock put and call options expire simultaneously. That often makes for heavy trading volume and volatile price swings as traders roll over or close out bets involving those “derivative” securities and individual stocks.

But whether triple witching will lead to more downward pressure on the market, or produce a sudden buying wave, is unclear. It will depend partly on traders’ collective mood on Thursday, and on how they adjust their positions before then.

* If stock and bond markets both continue to lose value today, stock and bond market timing services could cause additional selling as the week progresses. Those timing services often alert their subscribers to cash out when key market indexes decline 5% or more. The Dow Jones industrial average fell 3% on Friday.

* Wall Street will be watching for collateral damage from the latest surge in interest rates. Some bond dealers, and investors who have loaded up with the wrong kind of bond derivatives, could be reeling from their losses. Some surprise announcements of financial-firm failures can’t be ruled out.