With last week being a short week due to Independence Day, it's only fitting that we made a new all-time high on the S&P 500 ($SPX) (SPY) and that Tesla (TSLA) ran higher into the holiday. The SPY closed the week up over 1.50% and Telsa closed the week up around the $250 mark.
This week the news is mostly backloaded to the second half of the week with PPI, CPI, and Sentiment all due out as well as bank earnings starting on Friday. In addition we have several fed speakers and Powell in front of the Senate Banking Committee.
Here are 5 things to watch this week in the Market.
Bank Earnings
Earnings kick off in earnest this week with some major banks starting to report on Friday. JP Morgan (JPM), Wells Fargo (WFC), and Citigroup (C) are all due out. In addition to the numbers themselves, looking at how these banks are viewing the rest of the year could be where the real information lies. Things like delinquency rates, traffic, savings data, and even their guidance (which is heavily dependent on rates) could all be things that can tip off someone where they think the economy is heading. Given the size of these banks, they can be a great barometer of the economy, even better than the government data.
Powell Testifying and FED Members Speaking
Tuesday at 10 am Powell is expected to testify in front of the Senate Banking Committee. Given the squeeze many Americans are feeling with wage stagnation and price inflation, the question and answer session could cause some volatility if they get into rates and what he expects for the rest of the year.
Additionally, there are several other FOMC members speaking throughout the week. These speeches don’t often have a lasting impact but can cause some volatility when they are actually talking.
CPI
Thursday morning CPI is due out and at the time of this writing there is no estimate officially given. This makes it hard to gauge how the market could react to a reported number, but given that last month's reported m/m number was 0% if we see any rising in inflation, especially a huge jump from last month, we could see some selling come into the market. If CPI reports out around zero again, or better yet, is negative then we could see the market rally.
PPI
Friday the producer counterpart to CPI comes out. Similar to the CPI number, PPI also has no official estimate at the time of this writing, but similar to CPI we came in around 0% last month for the core m/m number. If we see a big jump in PPI this month, we could see the market start to move as that could mean CPI is due to increase in the future. If PPI stays around 0% though, similar to the CPI report we could see the market start to really.
Sentiment
The last release of the week is the University of Michigan Consumer Sentiment. This is an interesting release because, unlike the inflation data, it does not always affect the market the same. Sentiment has been on a steady decline over the past 6 releases showing that the consumer has a deteriorating expectation for the economy. If this trend continues and the inflation data is poor, we could see it move the market and cause some additional volatility. If either of the inflation prints is good or sentiment is a beat, its possible it does not have a large effect on the market.
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.
