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Fed Policy, Market Indicators, and Earnings to Keep an Eye On A Week of High Stakes: Federal Reserve, Economic Data, and Earnings Dominate Investor Focus

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A Recap and Outlook

Last week, the Federal Reserve reaffirmed its decision to maintain rates at 5.50%, a move widely anticipated by Wall Street. However, what truly stirred the markets was the subtle hint at three potential rate cuts looming for the rest of the year during Powell’s post-meeting press conference. Despite this, Powell’s adept communication skills soothed investor anxieties, propelling the S&P 500 to a record high in the days following. On the earnings front, most companies reported positive results, with the exception of Lululemon, whose stock took a nosedive after-hours, wrapping up the week with a significant decline of over 13%.

Key Events This Week

This week, investors have their eyes set on a series of crucial events unfolding in the financial landscape.

Earnings Reports

The earnings season is winding down, with only a couple of notable releases this week. First up is GameStop (GME) reporting on Tuesday post-market close, a stock that, despite its limited impact on the overall market, has the potential to generate considerable market volatility, especially given its history with meme stock frenzy. Another company to watch is Walgreen Boots Alliance (WBA), revealing its earnings on Thursday before the market opens, offering valuable insights despite its modest influence on broader market trends.

New Home Sales Data

Monday at 10 am brings the much-anticipated new home sales data, a crucial indicator shedding light on the real estate sector’s health. Recent reports indicate a downward trend in new home sales, possibly influenced by escalating home prices or rising interest rates. An unexpected positive outcome might inject optimism into the market, aligning with the Federal Reserve’s cautious approach, while a weaker-than-expected report could trigger a sell-off.

Insights from Fed Speakers

This week features speeches from various Federal Reserve officials, with key addresses expected to make waves in the financial markets. Governor Waller’s speech scheduled for Wednesday evening in New York holds potential for substantial market impact, as does Fed Chair Powell’s address on macroeconomic policy come Friday morning.

GDP Announcement

Thursday will unveil the US GDP data, a release capable of steering market sentiment based on the economic health it reflects. A robust GDP figure might signal an overheated economy, contradicting the Fed’s desire for a rate cut, while a weaker outcome could offer the Fed a green light to pursue rate reductions, making the market likely to rally in response to a miss and dip on a beat.

Core PCE Data

Wrapping up the week on Friday is the core PCE report, a vital inflation indicator the Fed closely monitors. An inflation figure surpassing expectations could instigate fear of delayed rate cuts and prompt a market downturn, whereas meeting or falling below expectations might fuel hopes for potential rate cuts later in the year, potentially driving the market upwards.

Wishing all investors a fruitful week ahead, and do not forget to explore the daily options article for additional 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.

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