Economy and markets: The coming week
With no market-moving earnings releases scheduled for this week, investors will be focused on the many important economic reports scheduled to be released in the next few days. The focus will be on the PCE data, which will help investors understand the ongoing impact of the Fed’s rate hikes.
All major U.S. indexes rose sharply last week, posting their fourth straight weekly gain, as markets interpreted recent weakness in some economic data points as confirmation that the Fed’s rate-hiking cycle is over. Markets also expect policymakers’ next move to be a rate cut, likely by mid-2024. Last week’s biggest winner was the Dow Jones Industrial Average (DJIA) with a jump of 1.27%, while the S&P 500 (SPX) rose by 1.13%. The Nasdaq Composite (THEN) of the Nasdaq-100 (NDX) rose by 1.07% and 1.06%, respectively.
Minutes of the Federal Reserve’s latest meeting, released last week, were slightly less dovish than investors expected. While all FOMC participants agreed that they should “proceed cautiously,” many of them said that inflation risks continue to rise. The minutes confirmed the Fed’s message that interest rates should stay higher for longer, but the recent string of mostly weak economic data released after the last Fed meeting raises some question marks about the length of the rate hike period. Investors now expect the Federal Reserve to maintain its more or less hawkish rhetoric. Many interpret this rhetoric as an attempt to keep market sentiment under control to prevent excessive easing of financial conditions.
While the economic data of the last few months suggests a certain slowdown, consumers have held up so far. However, there are signs that the U.S. consumer is starting to feel the pressure of higher monetary costs, and sales are expected to grow more slowly this holiday season than the average over the last decade. JP Morgan (JPM) has warned its clients that slowing consumer spending combined with falling inflation will weigh on its earnings outlook through 2024 and potentially lead to significant EPS downgrades, which in turn could lead to market declines. The bank’s strategists recommended reducing portfolio risk for next year.
In this uncertain environment, investors are strongly advised to closely monitor economic reports and base their decisions on trusted data and analysis.
Upcoming earnings and dividend announcements
Reporting for the third quarter of 2023 is almost complete, but there are still a few important reports scheduled this week.
The most notable earnings events in the coming week are Dollar Tree’s reports (DLTR), Foreclosure (CRM), Ulta Beauty (ULTA), Zscaler (ZS), CrowdStrike (CRUD), NetApp (NT`), Splunk (SPLK), Okta (OKTA) and Kroger (KR).
Find company earnings dates, consensus EPS forecasts, past data, analyst ratings and price targets in the TipRanks earnings calendar.
Ex-dividend dates for Electronic Arts payouts are coming up this week (E.A), Home Depot (HD), Qualcomm (QCOM), Coke (IS), Bank of America (BAC), MC Donalds (MCD), General Motors (GM), eBay (EBAY), UnitedHealth (UNH), Nike (FROM) and other dividend paying companies.
Find ex-dividend and dividend payment dates, analyst ratings and company price targets in the TipRanks Dividend Calendar.
Upcoming economic calendar events
Several important reports are scheduled to be published in the next few days:
» GDP growth in the third quarter of 2023, annualized (second estimate) – Wednesday, November 29th – This report, published by the US Bureau of Economic Analysis, will provide an update to the first estimate of the health of the US economy in the previous quarter and incorporate new data received after the release of the first estimate. Economic growth in the third quarter is expected to be even stronger than previously thought, with analysts forecasting an annual growth rate of 5% (versus the original estimate of 4.9%).
» Core personal consumption spending in October (core PCE) – Thursday, November 30th – Published by the U.S. Bureau of Economic Analysis, this report reflects the average amount of money consumers spend each month, excluding seasonally volatile products such as food and energy. FOMC policymakers use the annual core PCE price index as their primary indicator of inflation. Analysts expect core PCE to mimic the disinflationary trend observed in the CPI report and slow further from September.
» ISM Manufacturing Purchasing Managers’ Index for October – Friday, January 12th – This report released by the Conference Board shows business conditions in the U.S. manufacturing sector. It is an important indicator of the overall economic situation. PMIs are considered some of the most reliable leading indicators for assessing the state of the U.S. economy and help analysts and economists properly anticipate changing economic trends. Unlike other sectors of the economy, manufacturing has been declining for 11 months; in October it is expected to have moved deeper into the contraction zone.
Current and planned economic reports, Fed statements and other publications as well as their impact on the stock markets can be found in the TipRanks economic calendar.
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