Last week presented a departure from the heightened volatility witnessed throughout much of February, with the S&P 500 ($SPX) (SPY) exhibiting a modest gain of just over 1%. It was a week characterized by a steady, incremental ascent rather than dramatic fluctuations. Earnings reports, while still significant, exerted only a mild influence on the broader market, and even companies that missed expectations staged robust recoveries in the days following their announcements.
Looking ahead, this week is poised to maintain a similar tone, with earnings remaining a focal point but unlikely to trigger significant shifts in overall market sentiment. Federal Reserve Chair Jerome Powell’s testimony, alongside forthcoming inflation data and the highly anticipated Non-Farm Payrolls report on Friday, will offer additional insights into economic trends and potential policy responses.
Here are 5 things to watch this week in the Market.
Earnings
Earnings reports continue to command attention this week, with some notable releases still on the horizon. On Tuesday before the market opens, Target (TGT) is set to report, offering insights into consumer behavior similar to Walmart’s recent performance. A decline in foot traffic and average purchases at Target could signal underlying weaknesses in the economy, contrary to optimistic economic indicators.
Thursday after hours will see reports from Broadcom (AVGO) and Costco (COST), each carrying its own significance. Broadcom’s recent acquisition of VMware, coupled with plans to raise prices substantially, raises questions about its strategic direction. This move could either pay off handsomely or backfire significantly, akin to Netflix’s successful implementation of account restrictions. Meanwhile, Costco’s earnings report will provide valuable data on consumer spending trends and foot traffic, given its expansive demographic reach.
ISM Service PMI
On Tuesday, the ISM Services PMI will be released, serving as a key indicator of industry expansion or contraction. Recent releases have consistently hovered slightly above the 50 threshold, signaling expansion but with marginal growth. Given prevailing economic concerns, a lower-than-expected reading or one below 50 could prompt market selling, reflecting apprehensions about economic health. Conversely, meeting or exceeding expectations could spur market optimism and potentially fuel a rally, suggesting resilience in the economy despite prevailing uncertainties.
JOLTS Job Openings
The Job Openings and Labor Turnover Survey (JOLTS) data will be released at 10 am on Wednesday, potentially introducing short-term volatility to the market. Job openings are considered a leading economic indicator, offering insights into labor market dynamics and overall economic health. Monitoring the number of job openings can provide further clues about employment trends and the strength of the economy. Additionally, revisions to previous months’ data should be closely watched, as they could alter market expectations and sentiments based on updated information.
Powell Testifying
Federal Reserve Chair Jerome Powell will testify at the Semi-Annual Monetary Policy Report in the House on Wednesday and Thursday, commencing at 10 am Eastern Time. Although it’s improbable that Powell will make groundbreaking statements during the testimony, as the nation’s leading Central Banker, his remarks regarding the economic outlook and future interest rate plans could potentially impact market volatility. Investors will closely analyze his comments for insights into the Fed’s monetary policy stance and its implications for the broader economy.
Non-Farm Payroll
Non-farm Payrolls data, also known as Non-farm Employment Change, is scheduled for release on Friday at 8:30 am. This report is considered a reliable indicator of workforce trends. The forecast suggests an addition of 190,000 jobs, but recent months have seen significant outperformance, potentially indicating another strong result. Past instances of beating expectations have led to market rallies, so a similar response may occur this time. Additionally, any revisions to previous month’s figures could provide insight into the underlying health of the job market. Wishing you success in navigating the week ahead, and be sure to check out my daily options article for more insights.
Please note that I do not hold positions in any securities mentioned, and all information provided is for informational purposes only.