The general market ended the week basically flat with the S&P 500 ($SPX) (SPY) being up 0.33% on the week. That does not tell the full story of the week though, there was some excitement and letdown in US politics that moved the market a bit after hours and then there was Nvidia (NVDA). They beat earnings but perhaps the real story was that they mentioned the term “AI” well over 100 times in their earning call. The stock opened the next day up over 10$ and continued to run in the Thursday and Friday sessions to end the week up over 25%. Options would have paid handily on it, even accounting for the spiked IV due to earnings.
This week looks to be quiet on the news front, but with Fed speakers and a few key pieces of data, excitement still may show up. Here are 5 things to watch this week in the market.
FOMC Member Bowman
Talks from members of the Federal Open Market Committee (FOMC) can have substantial effects on the stock market, and appear to be happening more and more frequently. Being the decision makers for the US rates, investors tend to watch the language of these people very closely. Depending on the stance, it's possible to see some volatility around the event and given the nature of the fireside chat on global economics, it's possible to see some movement over the lunch hour on Tuesday when he talks.
Chicago PMI
The Chicago Purchasing Managers Index (PMI) is a key indicator of economic health in the manufacturing sector. A higher-than-expected reading should be taken as positive for the stock market, while a lower-than-expected reading should be considered negative. Just because this is how the market reacted in the past to this piece of news though does not mean it will continue to. With a possible default looming in the US, its possible bad news is good news when it comes to economic data as it could force the parties to come together to avert a shutdown.
JOLTS Job Openings
JOLTS measures job vacancies in the U.S. economy. The number of job openings can signal the overall health of the labor market and, by extension, the economy as a whole. The FED has been attempting to slow down a tight labor market and this could be an indication if they are succeeding or not. If the market is still tight it could mean that more tightening is on the way which could mean some sell-side pressure on the markets. Conversely, if it comes in a little weaker than expected the markets could see it as a possibility of less tightening and even some rate cuts.
Bank Holidays
Several countries have bank Holidays on Monday including the US with its celebration of Memorial Day. Due to this, the markets will be closed and that could mean lower than usual volume going into the rest of the week. This holiday is also often the start of “Summer Trading” which is often signaled by tiger ranges and lower volume. With all the news on deck and the potential issues in the economy though, it will be interesting to see if we break that pattern this year.
Beige Book
The Beige Book is a report published by the Federal Reserve eight times a year. It provides an overview of the current economic conditions across the 12 Fed Districts, and it can significantly influence the stock market as it provides insights into changes in the economy that might influence the Fed's monetary policy. Investors often closely watch the Beige Book release to try and discern potential clues to upcoming policy in order to position effectively.
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.
