Last week saw a replica of the previous trading week with a big gap lower on Monday, recovery through the week and then more selling pressure on Friday. It was really strange to see the exact same price action play out two weeks in a row. We also had major tech earnings from Amazon (AMZN), Palantir (PLTR), Advanced Micro Devices (AMD) and others, while Friday's jobs report showed some weakness in the labor market. The S&P 500 ($SPX) (SPY) put in another lower high and finished -0.17% for the week..
Here are 5 things to watch this week in the Market.
CPI Report
Wednesday’s Consumer Price Index (CPI) report at 8:30 am will be the week's most closely watched event. After last week's Fed comments suggesting a patient approach to rate cuts, this inflation reading takes on added importance. The market will focus not just on headline numbers but particularly on core CPI, which excludes volatile food and energy prices. Any significant deviation from expectations could impact rate cut timing expectations and create market volatility.
Powell Testifies to Congress
Fed Chair Jerome Powell will deliver his semi-annual monetary policy testimony to Congress, appearing before the House Financial Services Committee on Wednesday and the Senate Banking Committee on Thursday. Given recent strong economic data and the Fed's pushback against March rate cut expectations, his testimony and the subsequent Q&A sessions could create significant market volatility. Market participants will closely monitor his comments for any shifts in stance on inflation, economic growth, and the timing of potential rate cuts.
PPI Data
Thursday’s Producer Price Index (PPI) at 8:30 am will offer another perspective on inflation pressures. While CPI measures consumer prices, PPI tracks prices at the wholesale level and can be a leading indicator of future consumer inflation. Coming after Tuesday's CPI report, any confirmation or contradiction of inflation trends could move markets.
Retail Sales
Friday brings the January Retail Sales report at 8:30 am. This data will provide crucial insights into consumer spending patterns following the holiday season. With consumer spending driving a significant portion of economic growth, this report could influence market sentiment about economic health. The number will be particularly interesting given recent mixed signals from various retailers' earnings reports.
Key Earnings
This week features several notable earnings releases across different sectors. McDonald's (MCD) starts the week on Monday. Tuesday brings Super Micro Computer (SMCI), which has been in focus due to AI developments, along with Shopify (SHOP) and Coca-Cola (KO). Later in the week, we'll hear from digital payments player Coinbase (COIN), cybersecurity leader Palo Alto Networks (PANW), and sports betting company DraftKings (DKNG). These reports should provide insights into various sectors from AI to consumer spending to digital transformation.
Best of luck this week and don't forget to check out my daily options article.
