Economy and Markets: The Week Ahead
Stock markets were mixed on Friday. Among the major indexes only the Dow Jones Industrial Average (DJIA) finished the day’s trading in the red. The blue-chip index was weighed down by Delta Air Lines’ (DAL) stock, which nosedived on weak guidance, and UnitedHealth (UNH), which stumbled despite strong top- and bottom-line results because of higher reported premium costs.
The markets seemingly took in stride the not-so-great inflation report, which showed an uptick in headline CPI to 3.4% in December from 3.1% in the previous month. The reason for this is that excluding the shelter inflation, inflation is now below the Fed’s 2% target; meanwhile, the prices of shelter are also falling, albeit slowly. On the other hand, the Core PPI (Producer Price Index ex. Food and Energy), which serves as a leading indicator for consumer prices in the short-term, declined last month, injecting a dose of optimism regarding the CPI’s trend.
All major indexes clocked in the first winning week of 2024. The DJIA was up by 0.8% and the S&P 500 (SPX) increased by 1.35%, edging back towards its record high. The technology benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) jumped by 2.14% and 2.2%, respectively. Stocks were helped by mostly positive earnings reports from major banks, as well as by the unexpected PPI decline, which strengthened rate cut expectations. Technology shares were boosted by the SPX’s largest company by weight, Microsoft (MSFT), which surged 5.1% on the week, overtaking Apple (AAPL) as the world’s most valuable company for the first time since November 2021. Meta Platforms (META), the sixth-largest holding in the index, also contributed to the strong weekly gain with a 5.6% upsurge.
In this holiday-shortened week (markets are closed Monday for Martin Luther King Jr. Day) investors will be focusing on economic reports in search of data points which may validate or disprove the current market expectations of an interest-rate cut as early as March. While these expectations have come down a little since December, they still attribute a 77% probability to a 0.25% cut on March 20. Meanwhile, several policymakers, such as the Presidents of Cleveland and Richmond Fed banks, said that bets on a March cut are premature, as more evidence is needed that the CPI is firmly on track to the central bank’s target.
In this uncertain environment, investors are strongly advised to follow economic reports closely and to base their decisions on trustworthy data and analysis.
Upcoming Earnings and Dividend Announcements
The Q4 2023 reporting season has begun in earnest, with several important reports scheduled this week.
The most notable earnings reports will be published by Goldman Sachs (GS), Morgan Stanley (MS), PNC (PNC), Kinder Morgan (KMI), U.S. Bancorp (USB), Charles Schwab (SCHW), PPG Industries (PPG), Travelers Companies (TRV), and State Street (STT).
Companies’ reporting dates, consensus EPS forecasts, past data, analyst ratings, and price targets can be found on the TipRanks Earnings Calendar.
This week, Ex-Dividend dates are coming for EOG Resources (EOG), Watsco (WSO), Accenture (ACN), Procter & Gamble (PG), General Dynamics (GD), Caterpillar (CAT), CVS Health (CVS), and other dividend-paying firms.
Companies’ Ex-Dividend and Dividend Payment dates, analyst ratings, and price targets can be found on the TipRanks Dividend Calendar.
Upcoming Economic Calendar Events
There are several important reports scheduled to be published in the next few days:
» December’s Retail Sales – Wednesday, 01/17 – This report, released by the U.S. Census Bureau, provides information on how much money consumers are spending on various durable and non-durable goods. Since the report tracks the amount of spending in an economy, it helps to gauge the economy’s health and consumer spending habits, as well as the level of the buy-side inflation pressures.
» December’s Industrial Production – Wednesday, 01/17 – This report, released by the Federal Reserve, shows the volume of production of U.S. industries like manufacturing, mining, and utilities. Although industrial production accounts for a smaller portion of the economic activity than services, its sensitivity to consumer demand and interest rates makes it a leading indicator of GDP growth and economic performance.
» January’s Michigan Consumer Sentiment Index and UoM 5-year Consumer Inflation Expectations (preliminary readings) – Friday, 01/19 – These reports, published by the University of Michigan, portray the results of a monthly survey of consumer confidence levels and consumers’ views of long-term inflation in the United States. The level of confidence affects consumer spending, which contributes about 70% of the U.S. GDP. The inflation expectations index is used as a component of the Fed’s calculations of the Index of Inflation Expectations.
Current and scheduled economic reports, Fed statements, and other releases, as well as analyses regarding their potential impact on the stock markets, can be found on the TipRanks Economic Calendar.
