Everything to Know about Macro and Markets
Markets closed lower on Friday, clocking in a second straight week of declines following seven weeks of gains. The S&P 500 (SPX) and the Dow Jones Industrial Average (DJIA) fell slightly for the week, while the Nasdaq Composite (NDAQ) dropped by 0.73%.
Stocks were pushed down during the week by higher-than-expected readings on consumer and producer prices, reflecting still sticky inflation pressures and dampening expectations for a June rate cut. Treasury yields rose, pressuring tech stocks, which also suffered heavy investor profit-taking.
Friday also marked this year’s first “triple witching” event, which usually leads to a jump in market volatility, as it means that index futures, index options, and stock options all expire on the same day.
Macro News in Focus
This week, investors will focus on the Federal Reserve Board’s meeting on March 19-20 and the subsequent policy statement and interest rate projections report (“The Dot Plot”). While there is no expectation that the central bank will change its interest rates at the meeting, market participants await clues on the timing of the rate cuts projected for later this year.
The latest CPI (consumer prices) and PPI (producer prices) reports reflected stubborn inflationary pressures, with prices running higher than expected. Recently, a member of the Board of Governors Michelle Bowman said that she is not convinced that “inflation is moving sustainably” toward the Fed’s 2% goal, and therefore she sees a significant risk in cutting rates too soon.
Investors will closely watch whether the latest data has affected the Fed’s stance, while also bracing for the Core PCE (consumption expenditures ex. volatile items) report, scheduled to be released on March 29. The main concern is that the Fed’s preferred inflation measure will confirm the trend of a mild re-acceleration seen in the CPI and PPI reports. Meanwhile, several additional economic data points can sway the Fed’s policy stance.
Notable Stock News
Adobe (ADBE) shares plunged despite posting strong earnings growth in the previous quarter, as investors were spooked by a weaker-than-expected revenue guidance for Q1 2024. However, analysts express optimism about its new generative AI image creation tool, which is expected to lift ADBE’s revenues in the second half of the year.
Tesla (TSLA) stock dropped to a 10-month low in the past week, replacing Boeing as the S&P 500’ (SPX) worst performer. The stock took an additional blow after Wells Fargo cut its recommendation to “Sell” from “Hold” and reduced its price target, explaining that it doesn’t expect earnings growth to rebound soon.
Boeing (BA) stock continued its slide, shedding over a quarter of its market value since the beginning of this year. After one of its planes suffered a mid-flight blowout in January, prompting a federal investigation of its quality control failures, the company is now facing another embarrassment. Last week, a Boeing 787 Dreamliner plane plunged mid-flight, injuring passengers. Meanwhile, a whistleblower who called out the company’s flawed safety protocols was found dead just when he was about to give a testimony on the issue.
Oracle (ORCL) stock surged after posting higher-than-expected overall earnings and revealing robust demand for its cloud offerings, with notable tailwinds coming from AI infrastructure demand. Management said the company closed a big cloud infrastructure contract with Nvidia (NVDA) and hinted that an important joint announcement is coming at Nvidia’s global GTC developer conference next week.
Upcoming Earnings and Dividend Announcements
The Q4 2023 earnings season is over, but several important earnings releases are scheduled for this week.
This week’s most significant event will be the release of the earnings reports of the memory chipmaker Micron (MU), the logistics giant FedEx (FDX), and sports apparel and footwear retailer Nike (NKE).
Other notable earnings reports will be published by Tencent Music Entertainment (TME), General Mills (GIS), Accenture (ACN), Darden Restaurants (DRI), and Lululemon Athletica (LULU).
Ex-Dividend dates are coming this week for Taiwan Semiconductor (TSM), TotalEnergies (TTE), Broadcom (AVGO), Philip Morris (PM), Best Buy Co (BBY), Medtronic (MDT), Altria Group (MO), and other dividend-paying firms.
For more exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.
