(Bloomberg News) U.S. employment growth that trailed economists' forecasts in March presents a challenge that stocks have overcome nine times during the bull market that's driven the Standard & Poor's 500 Index up 107 percent in three years.

The Labor Department's monthly tally of U.S. hiring missed the median projection by 85,000, according to data compiled by Bloomberg. While the S&P 500 averaged losses of 0.8 percent in the day after shortfalls of this magnitude since March 2009, the benchmark gauge cut its decline in half a week later and was up 0.9 percent after two weeks, the data show.

S&P 500 futures tumbled 1.1 percent and yields on 10-year Treasuries fell the most since November after the April 6 report renewed concern about the pace of the U.S. recovery. Federal Reserve Chairman Ben S. Bernanke's March 26 pledge to keep "accommodative" monetary policy to stimulate jobs may cushion the blow to equities, said U.S. Trust Co.'s Chris Hyzy and National Securities Corp.'s Donald Selkin. So will corporate earnings, according to Wells Fargo & Co.'s Ann Miletti.

"With a bad number, the thought is, well, the Fed has ammunition," Hyzy, who helps oversee about $325 billion as chief investment officer of U.S. Trust in New York, said in an April 6 telephone interview. "The market comes back after a drop. The only way they add liquidity is if it looks like the economic recovery is receding."

Weekly Decline

The S&P 500 slumped 0.7 percent to 1,398.08 last week after the Fed signaled it may refrain from monetary stimulus and concern intensified about Europe's debt crisis. The index rallied to the highest level since May 2008 on April 2, a week after Bernanke said reducing the jobless rate "can be supported by continued accommodative policies."

The Labor Department's monthly report trailed economists' projections by 85,000 or more twice in 2009, four times in 2010 and three times in 2011, according to data compiled by Bloomberg. The S&P 500 tumbled 3.4 percent on June 4, 2010, for the biggest one-day slump. Two weeks later, the benchmark measure of U.S. stocks was up 1.2 percent from its June 3 close.

Stocks surged in the month after the government's statement on July 2, 2009, when the report fell short of projections by 102,000 jobs. The S&P 500 rose 5.6 percent in four weeks, recovering from a 2.9 percent loss on the first day, according to data compiled by Bloomberg. The index posted one-month gains even after shortfalls were announced in October and December of 2010 and February and June of 2011.

Global Retreat

Equities slumped around the world last week after the Fed signaled it will hold off on more monetary stimulus unless the U.S. economic expansion falters or prices rise at a rate slower than its 2 percent target. Minutes from Fed policy makers' March 13 meeting showed less urgency to add stimulus.

Weaker demand at a Spanish government debt auction fueled concern the global economic recovery will slow. Spain sold 2.59 billion euros ($3.4 billion) of bonds due between 2015 and 2020, compared with a planned maximum of 3.5 billion euros.

"The combination of the European problem and slow job growth may prompt the Fed to do something," Selkin, the New York-based chief market strategist at National Securities, which manages about $3 billion, said in an April 6 phone interview. "That's the only silver lining behind the cloud."

The S&P 500's valuation has climbed 21 percent to 14.4 times earnings since reaching a two-year low of 11.9 in October. The gain reflects an overestimation of U.S. economic growth mirroring 2011, according to Bill Fleckenstein, president of Fleckenstein Capital Inc. in Seattle. Forecasts for expansion in U.S. gross domestic product last year fell from 3.2 percent in March to 1.6 percent in September, according to surveys of economists by Bloomberg.

Carried Away

"People got all excited and carried away with themselves" since October, Fleckenstein said in an April 8 phone interview. "When we look at the next three months, it'll be back to the same subpar, weak economy stuff we've been going through for the past three years."

After increasing by 251,000 in April 2011, the most in a year, average growth in nonfarm payrolls slipped to 80,000 over the next four months, missing economists' projections three times, according to data compiled by Bloomberg. The S&P 500 slumped 19 percent from April 29 through Oct. 3.

Alcoa Inc., the New York-based aluminum producer, is scheduled to disclose first-quarter results tomorrow, the first Dow Jones Industrial Average company to report. While S&P 500 per-share profit growth slowed to 0.8 percent during the period from 4.9 percent in the fourth quarter and 15 percent in the three months ended in September, it will accelerate to 8.3 percent during all of 2012, according to analyst estimates compiled by Bloomberg.

"Earnings aren't at risk," Ann Miletti, a senior money manager for Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin, said in an April 6 phone interview. Her firm manages $213 billion. "We spend a lot of time with management teams, and I see more optimism this year than I did even at the end of last year, so I'm thinking that that should bode well."