Markets This Week, 11/27-12/01, 2023: Economy in Focus

Economy and Markets: The Week Ahead

With no market-moving earnings releases scheduled for this week, investors will zoom in on the many important economic reports scheduled to be published in the next few days. The main emphasis will be on the PCE data, which will help investors grasp the ongoing impact of the Fed’s rate increases.

All the main U.S. indexes rose strongly last week, wrapping up their fourth straight weekly gain, as markets interpreted recent weakness in some economic datapoints as a confirmation that the Fed’s hiking cycle has ended. Markets also expect that the policymakers’ next move will be a rate cut, which is likely to occur by mid-2024. The biggest winner of the past week was the Dow Jones Industrial Average (DJIA) with a jump of 1.27%, while the S&P 500 (SPX) rose 1.13%. The Nasdaq Composite (NDAQ) the Nasdaq-100 (NDX) increased 1.07% and 1.06%. 

The Minutes from the Federal Reserve’s last meeting, published last week, were a little less dovish than investors expected. While all FOMC participants agreed that they should “proceed carefully,” many of them said that risks to inflation continue to be on the upside. The Minutes confirmed the Fed’s “higher for longer” message, but the recent batch of mostly soft economic data, published after the latest Fed meeting, adds some question marks regarding the length of the higher-rates period. Investors now expect that the Federal Reserve will maintain its more or less hawkish rhetoric. Many interpret that rhetoric as an attempt to keep market sentiment at bay to prevent excessive easing of the financial conditions.

While the economic data in recent months have indicated some weakening, consumers have held up so far. However, there are signs that the U.S. consumer is beginning to feel the pinch of the higher cost of money, with the expectations for this holiday season’s sales to show a weaker increase than the past decade’s average. JPMorgan (JPM) has warned its clients that weakening consumer spending, coupled with declining inflation, will weigh on the earnings outlook going into 2024, potentially resulting in significant EPS downgrades, which, in turn, may lead to market declines. The bank’s strategists advised reducing portfolio risk for the next year.

In this uncertain environment, investors are strongly advised to closely follow economic reports and to base their decisions on trustworthy data and analysis.

Upcoming Earnings and Dividend Announcements

The Q3 2023 reporting has almost ended, but there are still some important reports scheduled this week.

The most noteworthy earnings events this coming week are the reports of Dollar Tree (DLTR), Salesforce (CRM), Ulta Beauty (ULTA), Zscaler (ZS), CrowdStrike (CRWD), NetApp (NTAP), Splunk (SPLK), Okta (OKTA), and Kroger (KR).

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 Electronic Arts (EA), Home Depot (HD), Qualcomm (QCOM), Coca-Cola (KO), Bank of America (BAC), McDonald’s (MCD), General Motors (GM), eBay (EBAY), UnitedHealth (UNH), Nike (NKE), 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:

» Q3 2023 GDP Growth Annualized (second estimate) – Wednesday, 11/29 – This report, released by the U.S. Bureau of Economic Analysis, will provide an update to the initial estimate of the U.S. economy’s health in the previous quarter, incorporating fresh data received after the first estimate’s release. The third quarter’s economic growth is expected to come in at an even stronger pace than was previously estimated, with analysts penciling in a 5% annualized growth rate (versus the initial estimate of 4.9%).

» October’s Core Personal Consumption Expenditures (Core PCE) – Thursday, 11/30 – This report, published by the U.S. Bureau of Economic Analysis, reflects the average amount of money consumers spend monthly, excluding seasonally volatile products such as food and energy. FOMC policymakers use the annual Core PCE Price Index as their primary gauge of inflation. Analysts expect the Core PCE to mimic the disinflation trend seen in the CPI report, slowing further from September.

» October’s ISM Manufacturing PMI – Friday, 12/01 – Released by the Conference Board, this report shows business conditions in the U.S. manufacturing sector. It is a significant indicator of the overall economic conditions. PMIs are considered to be some of the most reliable leading indicators for assessing the state of the U.S. economy, helping analysts and economists to correctly anticipate changing economic trends. In contrast to other economic sectors, manufacturing has been declining for 11 months; in October, it’s expected to have notched down deeper into the contraction territory.

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.