Last week inflation data and the Fed launched us up towards the highs on the indices with its decision to continue to hold rates steady. This made for a rally last Wednesday afternoon that you would have loved if you were long. The markets stalled Thursday though and opened and closed lower on Friday, but it was still a fantastic week with the S&P 500 ($SPX) (SPY) closing higher by around 2% on the week. This sentiment was magnified in tech with QQQ finishing the week up over 3%.
This upcoming week is pretty quiet heading into the Holiday with some consumer data and some housing information due out throughout the week. Volume could also start to slow down as the week progresses and we head into Christmas.
Here are 5 things to watch this week in the Market.
Volume
As we are getting closer to Christmas we may see volume start to taper off towards the end of the week. Even though the market celebrates the Holiday next Monday, it is not uncommon to see trading lighten up into the weekend. This is not something that will directly cause a market move, but volatility may be heightened around a news event if trading volume is lower than usual.
Building Permits/Housing Starts
Housing has been a real hot-button issue in the US for the last few years, and its also a real issue that the Fed is continuing to look at with interest rates. Both housing starts and building permits are due 8:30 Tuesday morning and could provide a clue as to if there is any relief coming for home seekers. If both come in higher than expected, it's possible we see markets rally on hopes that the Fed can start to cut rates and that housing will start to ease up. This could have a chain effect by also allowing consumers to spend more on goods and services and less on housing costs.
CB Consumer Confidence
Out Wednesday at 10 am is the Consumer Confidence number. This is an index of how the average household sees the overall economy. This has been slowly trending down over the past several releases, with the October release being revised down to under 100. While it's possible that this release moves the market, it more than likely won’t cause much volatility. It is a good measure of how the average person views the economy and the economic prospects they have which could offer clues to future potential issues. If people have a poorer view of the economy they are less likely to stay invested in the markets.
Unemployment Claims
Thursday at 8:30 we have unemployment claims due out. These releases usually cause some volatility for the Futures markets but are unlikely to continue to affect prices by the time the Stock market opens. Similar to consumer confidence though it could be a good gauge about overall economic activity. Each of the last 5 releases has been revised higher showing a slightly weaker workforce than initially indicated.
Core PCE
Friday morning we have the Core PCE at 8:30 and this could be a high-impact release. This is a primary inflation gauge for the Fed and if this comes out hot it could cause some volatility in the markets and also cause the Fed to second guess if it's time to cut rates. If this comes in as a miss though we could see markets get a nudge higher on lower inflation numbers.
Best of luck this week and don’t forget to check out my daily options article.
On the date of publication, Gavin McMaster did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
