Last week was characterized by volatile trading as both CPI and PPI figures exceeded expectations. While CPI was slightly elevated, the market responded with a rally after some initial selling. On the other hand, PPI, coming in even higher, witnessed initial buying followed by significant selling pressure.
Tesla (TSLA) encountered a challenging week with sustained selling pressure, leading to a decline of over 6% by the week’s end.
Bitcoin surged to reach new all-time highs, providing support to the broader market as strength in the cryptocurrency sector began to positively correlate with the overall market performance. As we look ahead to this week, a wave of anticipation awaits, with the highlight being the upcoming Fed Funds Rate announcement on Wednesday.
Key Market Events
Earnings
While earnings season is winding down, there are still notable names scheduled to report this week. Micron Technologies (MU) is set to report on Wednesday, following the footsteps of prominent chip makers like Nvidia and AMD. With a focus on AI contracts and advancements, technology companies are increasingly exploring opportunities in this space.
Thursday’s after-hours earnings reports will feature Nike (NKE), a significant consumer brand. Given recent discussions on consumer spending trends and rising credit balances, the sales figures disclosed by Nike could offer insights into the outlook for the remainder of the year. Following Adidas’ disappointing sales report last week, indicating an anticipated future decline, all eyes are on Nike to see if it mirrors this trend.
The second Thursday release comes from FedEx (FDX), a key player in the realm of online sales. As a major player in shipping consumer goods across the country, their report and outlook may shed light on the upcoming months in the retail sector.
Fed Funds Rate
The highly anticipated Fed Funds Rate announcement is scheduled for Wednesday. While the rate is expected to hold steady at 5.50%, the market’s reaction may hinge on the subsequent press conference. Any indication from Powell retracting further rate cuts could result in market sell-offs, dashing hopes for decreased rates. Conversely, reaffirmation of potential rate cuts could fuel market optimism on the prospect of more accessible funds.
PMI Data
Thursday will see the release of both Flash Manufacturing and Services PMI data. Following last week’s challenging inflation figures and weaker retail sales, the market’s response to these indicators may vary. Better-than-expected numbers signifying market expansion could trigger a downward market correction, reflecting concerns of a robust yet inflationary economy. Conversely, contraction in PMI figures might prompt buying activity, as investors pin their hopes on potential rate cuts in June.
Housing Market Insights
This week offers scattered housing data releases. Building Permits and Housing Starts figures on Tuesday will gauge new construction activities in real estate, potentially impacting market sentiments on the housing market’s flexibility. Additionally, Thursday’s Existing Home Sales data, which has shown stability recently, carries the possibility of market movements based on either a loosening or tightening real estate scenario.
Global Developments
Global tensions continue to linger in the news cycle, with issues such as Russia’s nuclear threats and France’s escalations contributing to market uncertainties. Furthermore, ongoing disruptions in global commerce, exemplified by the Red Sea attacks, pose risks to logistics companies, leading to production delays and supply chain interruptions. These factors collectively hold the potential to sway market dynamics significantly.
Wishing you a successful week ahead, and be sure to explore my daily options article for further insights.
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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
