Last week did not disappoint in the markets, Tesla (TSLA) missed part of its earnings report and sent the stock tumbling in the following session. This was matched with a general sell-off in the market as the S&P 500 ($SPX) (SPY) had its first 2% down day in a very long time. The market rallied though and ended the week down just under 1%.
This week we have more earnings to watch out for, plenty of news, and the FOMC statement out on Wednesday.
Here are 5 things to watch this week in the Market.
Earnings
Earnings were a mixed bag last week, with the appearance that the “AI” trade could be weakening.
On the note of the AI trade, Microsoft (MSFT) and Advanced Micro Devices (AMD) are both out on Tuesday after hours. Mircosoft is heavily involved with Open AI so any discussion about the cost and benefits of AI could mimic what Google (GOOGL) talked about last week. AMD is also attempting to break into the AI space, and given their command of the discount gaming segment, this could be a serious competitor to Nvidia.
Meta Platforms (META) and Boeing (BA) are out on Wednesday. Meta could also have a lot to say about the AI space given the prominence of their open source model Llama. One thing to watch is whether the costs continue to get out of hand to host these models. Boeing is a completely different story as it continues to be plagued by quality issues in the news. Watching how it expects demand to be in the coming quarters could be a big catalyst for the stock, even above normal profitability measures.
Lastly, on Thursday Amazon (AMZN) and Apple (AAPL) both report earnings and both of these companies have the power to move the market. Amazon will likely report out its Prime Day numbers and this, along with the use of the Cloud Services in AI could be catalysts for the stock. Apple, at this point, could be considered a mature company and could need to see better income and profitability rise in order to see any big reaction from the stock.
Consumer Confidence
In addition to earnings, we have a big news week ahead of us as well. It starts with Consumer Confidence on Tuesday. Given it's an Election year in the US, this could start to become important as candidates look to talk about the economy to rally their respective bases. A beat on confidence will likely be good for the market and a miss will likely be bad.
Fed Funds/FOMC
The big news release of the week is the FOMC rate decision and press conference. There have been a lot of people championing rate cuts early this fall so it could be interesting to see if that gets mentioned in the press conference after the release. For the release itself, if we come in in-line with expectations we may see the market rally. If there is a surprise in either direction it's possible we see a lot of volatility enter the general market. If it's a cut, we could see a huge rally on lower rates, if it's a surprise hike then we could see the market drop on the estimation that the Fed sees worse times ahead.
ISM Manufacturing PMI
Thursday morning ISM manufacturing PMI is out, and this measures the expansion or contraction in the manufacturing sector. This can be an important leading indicator of overall economic health and has been showing contraction over the past several releases. If this continues, we could see the market rally, especially if the rates were held unchanged the day before. If we are expanding though, we could see the market either hold flat or fall on the thought that we could be looking at longer before cuts.
Non-Farm Payrolls
Finally, the week wraps up with Non-Farm payrolls on Friday. This is one of the larger economic releases because it shows how well the employment situation in the country is. If we add jobs it's possible the market sees that as a problem for the rate cut narrative. If we come in at expectations or miss then we could see the market rally on continued fuel for the rate cut narrative.
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.
