Markets This Week, 11/13-11/17, 2023: Choppy Markets Close Higher

Economy and Markets: The Week Ahead

This week will be light on market-moving earnings reports, but relatively heavy on economic data releases, with many important reports coming out. Given the takeaway from Jerome Powell’s speech last Thursday, investors’ attention this week will be heavily drawn to the economic data coming out in the next days, as well as in the next weeks.

Speaking at an International Monetary Fund event in Washington, D.C., the Federal Reserve’s Chair said that policymakers are still not confident that interest rates are “sufficiently restrictive” to bring inflation down to under 2% annual rate. Powell added,  “If it becomes appropriate to tighten policy further, we will not hesitate to do so.”

The head of the U.S. central bank sent a clear message to the markets, which prematurely celebrated the end of the hiking cycle last week, after a batch of weak economic data seemed to confirm the Fed’s win over inflation. In his IMF remarks, Powell rebutted expectations of a more dovish Fed stance, basically confirming his multiple previous statements about rate decisions being data-dependent.

While Powell’s press conference on November 1^st was generally interpreted to portend another “hold” decision at the Fed’s next meeting in December, now the markets are weighing the likelihood that stronger-than-expected economic figures could push the policymakers’ hand.

On the other hand, the Federal Reserve members are aware that they risk pushing the economy into a recession if they tighten the monetary policy too much. Thus, the head of Atlanta Fed Bostic said on Friday that he believes the U.S. central bank doesn’t need to lift rates anymore, since the effects of the previous hikes will take some time to transpire.

Treasury yields notched lower from Thursday’s surge, helping the end-week rebound in stocks, led by technology companies, with the IT giants rallying the most. The Nasdaq-100 (NDX) surged 2.55% on the week, the Nasdaq Composite (NDAQ) jumped 2.05%, the S&P 500 (SPX) gained 1.08%, and the Dow Jones Industrial Average (DJIA) rose 0.61%.

As for the companies’ earnings reports, there was not much for the markets to celebrate in the past week, except for Walt Disney’s (DIS) blockbuster quarterly results. According to Factset, 81% of the S&P 500’s companies have reported Q3 results, with 82% of the ones that have reported exceeding EPS estimates.

These estimates might have been too pessimistic, as general market reaction to the EPS beats was somewhat muted. Meanwhile, companies that reported underwhelming results were punished by much stronger stock price decreases than in any quarter since Q2 2011, according to Factset data.

The future direction of the stock market is expected to continue depending on the movements of the largest companies in the S&P 500, which account for ~90% of the index’s gains this year, in the narrowest performance since 2008. On the other hand, if the Fed succeeds in bringing down inflation without pushing the economy into a recession, investors will rediscover small- and mid-cap stocks, pushing up the broad market.

In this uncertain environment, investors are recommended to base their decisions on trustworthy data and analysis.

Upcoming Earnings and Dividend Announcements

The Q3 2023 reporting is drawing to an end, but there are still many important reports scheduled this week.

The most noteworthy earnings events this coming week are the reports of Monday.com (MNDY), Tower Semiconductor (TSEM), Home Depot (HD), Cisco Systems (CSCO), Palo Alto Networks (PANW), NetEase (NTES), Target (TGT), Walmart (WMT), Alibaba (BABA), and Applied Materials (AMAT).

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 the payouts of ConocoPhillips (COP), Eli Lilly & Co (LLY), Exxon Mobil (XOM), KLA (KLAC), Cintas (CTAS), Microsoft (MSFT), Amgen (AMGN), Unilever (UL), Raytheon Technologies (RTX), 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:

» October’s CPI and CPI ex. Food and Energy (Core CPI) – Tuesday, 11/14 – These reports measure changes in the retail prices of goods and services in corresponding data subsets. The CPI report is one of the two key inflation measures (the second one is the Personal Consumption Expenditures or PCE). Policymakers, businesses, and consumers closely watch the CPI report, as it reflects the price trends in the economy, shapes consumer spending and business outlooks, and directly affects the Federal Reserve’s policy rate decisions.  

» October’s Producer Price Index (PPI) – Wednesday, 11/15 – This report, released by the Bureau of Labor statistics, reflects input prices for producers and manufacturers. Since PPI measures the costs of producing consumer goods, which directly affects retail pricing, PPI is seen as a good pre-indicator of inflationary pressures, i.e., a leading indicator for the next month’s CPI. Thus, the PPI serves the policymakers in shaping their overall inflation outlook. 

» October’s Retail Sales – Wednesday, 11/15 – 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 buyside inflation pressures.

» October’s Industrial Production – Thursday, 11/16 – 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.

Current and scheduled economic reports, Fed statements, and other releases, as well as their level of impact on the stock markets, can be found on the TipRanks Economic Calendar.