Last week was a fairly flat week with the S&P 500 ($SPX) (SPY) finishing slightly higher on the week. There was the Apple (AAPL) event where they announced the VR headset to what appears to be mixed reviews. The market seemed to like it though as it rallied a few dollars off the conference. Tesla (TSLA) also had another crazy week, it ended up over 10% to close around the $245 handle.
This week is packed with news and events. The FOMC is the big one of the week, but we also have CPI, PPI, Bond Auctions, Oil Reserves (which may be important with the OPEC cut), and plenty of other big news. Without further ado, here are 5 themes to watch in the Market this week.
FOMC
The Federal Open Market Committee (FOMC) will be releasing its economic projections, statement, and the federal funds rate, followed by a press conference. These announcements are usually closely watched by investors as they provide insights into the current economic condition and the monetary policy stance of the Federal Reserve. Any unexpected changes or hints about future interest rate decisions could significantly influence the stock market behavior due to their implications for rates, timing, and monetary printing. This is an event that can make or break a week, so it's important to remember cash is always a position.
CPI’s
This week we have the Core CPI, as well as the m/m and y/y CPI numbers. These indicators measure the changes in the price level of a basket of consumer goods and services. This is the number everyone usually points to when we talk about inflation. An unexpected increase in the CPI can signal rising inflation, which might signal the Fed to continue to raise interest rates. On the other hand, a lower-than-expected CPI may cause the Fed to pause or even lower rates given where we are currently. This is often a wild release though, especially given how inflation is a headline topic as of late.
PPI
On the opposite side of the price equation, we have the PPI. It measures the average changes in prices received by domestic producers for their finished goods. It is a leading indicator of consumer price inflation. When producers pay more for goods and services, they are more likely to pass these costs on to consumers. If the PPI data comes in higher than expected, it could be a sign that inflation is still increasing, which could also add to the pressure on the FED and by correlation on the Markets in general.
Retail Sales
Retail sales data is a timely indicator of broad consumer spending patterns. It is important to note though that this is the value of all retail spending, not the volume. This is a significant difference because while the value may be increasing over time, if the price of goods is significantly higher than that actual economic activity may be shrinking as each item costs more. Either way, this is a pretty significant forward indicator of economic activity for the US, as we are a mostly consumption-based economy.
Consumer Sentiment
Finally is Consumer Sentiment. This index measures the level of consumer confidence in the US economy. This is turning out to be a potentially important report as it's a truly forward indicator of how people feel about the economy. A higher-than-expected reading could be bullish for the stock market while a lower-than-expected reading can be bearish. After a week of big news releases this one may not actually move the markets all that much, but it's important on a macro scale to watch.
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.
