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Market Preview: Feel the Fear

Tickers in this article: SPY ^DJI FB ^GSPC ^IXIC

NEW YORK ( TheStreet) -- So what exactly is going to bring investors back after a May like that?

Thursday's last-minute wipeout was a fitting end to a beyond ugly month, and all the same questions -- Greece, Spain, the fiscal cliff, what happens when Operation Twist is over? ... take your pick -- remain.

Corporate America is holding up okay. First-quarter earnings season was better than expected and the forward price-to-earnings multiple for the S&P 500 isn't out of whack at 12.5X, but there's some reason to worry. Earnings estimates for the second quarter have come down in the past month, according to data from Thomson Reuters , which says analysts are now expecting profit growth of 7.4% vs. 9.2% on April 1.

Also, two of the sectors that were market leaders earlier in 2012, financials and technology, have seen serious missteps of late; JPMorgan Chase's (JPM) bad trade and Cisco's(CSCO) poor outlook (among others within tech), raising questions about what sector has the wherewithal to pick up their slack.

That leaves the economic data, which has also been just okay of late as well. There are some signs of life in housing but the employment picture is the bigger concern and Thursday's ADP number and jobless claims don't bode well for Friday's May jobs report.

The consensus, according to Briefing.com, is for nonfarm private payrolls to increase by 168,000, which would be a healthy jump from 130,000 in May but economists were expressing some doubts on Thursday.

"If the official payroll number is in line with ADP - and statistically speaking, ADP is by far the best indicator of payrolls on a month-to-month basis - then May will be the third straight soft month," wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics . "We think the slowing in employment growth largely reflects the impact of the surge in gas prices between December and April, but with prices now barreling back down we look for better numbers in the summer. In the meantime, we have to expect a payroll tomorrow of about 130K."

Both Capital Economics and RDQ Economics are higher, expecting private payrolls of 175,000.

While acknowledging some downside risk to that estimate, Paul Ashworth, chief U.S. economist at Capital Economics, stood by the view that any softening in domestic employment numbers in 2012 won't be on the same scale as last year; news that may actually be disappointing to those hoping the Federal Reserve will again be goaded into more quantitative easing.

"The labor market has come off the boil a little since spring arrived, but the slowdown is much more modest than the one we saw last year," he wrote earlier on Thursday. "The Fed only signed off on last September's Operation Twist after the initial estimate released early in that month suggested that payrolls had not increased at all in August. There's a big difference between zero and 133,000. QE3 is far from the near certainty that some commentators seem to believe."