The big news last week came out on Wednesday as the Fed held rates firm at 5.50%. This was as expected, but the real story was at the press conference after when it became clear that it just narrowly agreed to keep 3 cuts for this year. Powell did a great job of quelling any potential fear from this as we rallied over the next few days to a new all-time high on the S&P 500 ($SPX) (SPY).
From an earnings perspective, most of the companies we looked at last week had positive results. The only drag was Lululemon which cratered after hours and finished the week down over 13%.
This week there are some of the usual news releases, some additional Fed speakers, and just a few earnings to watch.
Here are 5 things to watch this week in the Market.
Earnings
We are really reaching the end of earnings announcements. There are only two announcements to really keep watch on this week. First up is Gamestop (GME) Tuesday night after the market closes. This really is not an important name to market action, however, since the meme stock mania a few years ago, this can produce a decent amount of volatility if it starts to lift off. The other name is the much larger Walgreen Boots Alliance (WBA) which reports Thursday before the open. As noted above, neither is particularly important to the overall market but is important to keep an eye on.
New Home Sales
New Home Sales are out Monday at 10 am and are an important indicator of the state of the real estate market. Over the past several months, many of these reports have been revised down indicating new home sales are starting to lock up. This could be a factor of sticker shock or the higher rates, but either way, it's a potential crack in the economy. If it comes out better than expected, we could see the market rally, especially given the Fed statements last week about watching the data before any rate decisions. If we come in at a miss though we could see some selling step in.
Fed Speakers
There are Fed Speakers almost every day this upcoming week and they are at all different hours of the day. The highest potential impact speeches are Governor Waller who is speaking in New York at 6 pm Wednesday evening. The other potential high-impact event is Fed Chair Powell speaking (again) at a macroeconomics policy Friday at 11:30 am
GDP
Thursday morning the US GDP is due out and this could really be a market mover. If this comes in strong it could potentially be a bad sign for the Fed. A persistently strong economy could go against what the Fed would want to see to cut rates leading to a higher longer mentality. If we come in weaker than expected though, it could be a great sign for the Fed and be a green light to look to cut rates. For these reasons, it's possible that we rally on a miss, and sell on a beat.
Core PCE
Finally, on Friday we have core PCE which is an inflation measure in goods and services purchased by the consumer. This measure is very important because it is one of the few inflation measures the Fed looks at directly. If we come in higher than expected, we could see the market drop on the fear that cuts will get pushed further down the road. If The PCE comes in at or below expectations we could see the market rally on the hopes that cuts are still on the table for later this year.
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.
