By Angela Moon
NEW YORK (Reuters) - After months of subpar economic data that has been blamed at least partially on the brutal winter weather, investors may still struggle to discern the real picture of the economy next week.
The closely watched monthly jobs report due on Friday is expected show that employers stepped up hiring a bit in February, but there is a greater-than-unusual amount of uncertainty around forecasts given that the weather remained unseasonable.
In addition, questions over whether Russia could be drawn into the conflict in Ukraine will likely weigh on investor sentiment. March futures on the CBOE Volatility index, Wall Street's so-called fear gauge, shot up nearly a percent even as the S&P 500 closed at another record high on Friday.
"It will be interesting to see the action on S&P futures on Sunday night based on the kind of developments we see in Ukraine. There are definitely concerns out there and with the S&P 500 at a record again, it's a great time to buy some protection like the VIX," said JJ Kinahan, chief strategist at T.D. Ameritrade in Chicago.
The spot VIX <.VIX> closed down 0.3 percent at 14 on Friday.
THE WEATHER FACTOR
For the past couple of months, interpreting U.S. economic figures has taken on a familiar pattern: questions are raised about possible weakness in demand, then investors shrug and dismiss it all as a product of bad weather.
Reports from government agencies, private surveys and U.S. corporations have blamed colder-than-normal weather and heavy snowfall across large swaths of the country for everything from slack retail sales and weak employment data to poor industrial output.
If the payrolls' growth figure for February comes in around the consensus of 148,000 on Friday, it is likely to fuel optimism that the economy is pulling out of its weather-induced funk. A weak reading, in contrast, will lead to more hand-wringing and fuel debate over whether the economy is weakening.
On Wednesday, payrolls processor ADP releases its report on private-sector hiring. A separate report from ISM the same day is expected to show the expansion of the services sector slowed in February. The U.S. Federal Reserve will release its Beige Book, an anecdotal review of business activity across the country, on Wednesday.
"This first quarter macro numbers may be dampened a bit again by the bad weather and some of the impact on the demand," said Natalie Trunow, chief investment officer of equities at Calvert Investment Management, which has about $13 billion in assets. "But I think the overall trend will be positive."
The S&P 500 ended at another record close on Friday but was well off the day's highs after Ukraine's acting president accused Russia of open aggression and said Moscow was following a similar scenario to the one before it went to war with Georgia in 2008.
But overall, Wall Street has been relatively calm to problems in Ukraine and Russia thanks to a better-than-expected earnings season. All three major indexes closed out the month of February with strong gains. The Dow Jones industrial average scored its best monthly percentage gain since January 2013, while the S&P 500 had its best month since October.
In almost the last week for major earnings, a number of big retailers are due to report next week, including Costco Wholesale Corp and office supplies retailer Staples on Thursday.
(Additional reporting by Caroline Valetkevitch; Editing by Leslie Adler)