First off, Happy New Year. We have finally reached the end of 2023 and the markets did not disappoint this year with the S&P 500 ($SPX) (SPY) returning just shy of 25% and the Nasdaq (QQQ) returning a staggering 54% on the year.
We will hit the ground running in 2024 with some big news out this week including Fed minutes, PMI and Nonfarm Payroll. All of these things will no doubt lead to an exciting week in the markets.
Here are 5 things to watch this week in the Market.
New Years
Similar to last week there is a Bank Holiday on Monday to celebrate the New Year so the markets will be closed. This will more than likely not affect volume the rest of the week though as it will be the start of the new year and most traders should be back at the office.
ISM Manufacturing PMI
Out Wednesday morning is ISM Manufacturing PMI comes out and for the past several months we have been below a 50 reading which signals continued economic contraction in the Manufacturing space. The current forecast is 47.2 for the report, and if it comes in as a beat we may see the market rally given inflation appears to be coming down and the economy would be signaling an expansion. If the report is a miss though, it's possible we see the market slide on poor economic conditions and the possibility of slipping into a recession.
JOLTS Job Openings
Also out on Wednesday is the JOLTS Job Openings. Similar to the ISM number, this is a leading indicator of economic health. Labor was quoted a lot over the last year as a potential reason for the increasing rates, so if we see openings start to increase month over month it could be a driver for larger or more frequent rate cuts in the coming year. If we see openings fall though, it could be the reason for the Fed to keep rates where they are for longer and reduce the magnitude or quantity of cuts in the coming year.
FOMC Meeting Minutes
Speaking of the Fed we have the Meeting Minutes out for their last rate release on Wednesday as well. This often causes some significant market volatility as traders quickly try to parse the language used in the release to try and get an edge on the next move. Seeing as Powell has already signaled that they would like to start to cut in the next year it is unlikely that any big revelations will be revealed in the minutes so volatility may not stick around for long.
Non-Farm Payrolls/Hourly Earnings
Finally, on Friday we have Non-Farm payrolls and Average Hourly Earnings coming up at 8:30 am. Similar to JOLTS earlier in the week, these numbers focus on employment, and this was a hot issue last year with rising prices and fairly stagnant wages. If Non-farm comes out better than expected we could see the market rally on the positive news. If it's a miss we could see the market stall or start to sell on the weakening economy. Also important, but potentially not a market mover, is the Average Hourly Earnings. Costs have been getting higher and even if inflation is subsiding will likely remain elevated for a while, if there is a solid jump in the hourly earnings it could be a very positive sign for the economy as wages will be keeping up with costs. If the wage growth is stagnant or worse, it could be seen as negative for the economy in general. Again, this may not move the market but could be something important to keep an eye on.
Best of luck this week and don’t forget to check out my daily options article.
On the date of publication, Gavin McMaster did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
