A great week for the stock market with the S&P 500 ($SPX) (SPY) closing up over 3% and many individual stocks up significantly more than that. Apple (AAPL) closed the week up over 4%, Amazon (AMZN) closed up over 7% and Tesla (TSLA) closed the week up over 8% for a banner week. Starlink won a federal contract, and since most of Elon’s companies are privately held Tesla stock often feels the pain or euphoria of anything Elon does.
Markets breathed a sigh of relief last week as it appears the debt ceiling drama has come to an end (at least for now). Even with that behind us, there are still plenty of things to watch in the upcoming weeks and months. Here are 5 things to watch this week in the market:
Crude Oil Inventories
This is a mix of both macro and micro forces on the market. On a macro scale, gas prices are starting to rise again in the US, and a build in crude could help offset any further rises. This is usually good for the economy overall as it keeps the cost of commuting both labor and goods reasonable. On a micro-scale, this will directly impact stocks in the energy sector. A build shows a waning demand and could be bearish for energy stocks, while a draw on crude would show increased demands which often leads to higher margins for energy companies.
Consumer Credit
Consumer credit often serves as a bellwether for consumer confidence and spending habits. High consumer credit levels can signal consumers' willingness to borrow and spend, potentially augmenting company revenues and buoying earnings in the short term. On the flip side of that, an over-dependence on debt can show that consumers are relying too heavily on debt to cover expenses. This is often caused by a rapid spike in inflation as we have seen over the past year. Either way a large increase in debt could be seen as detrimental to the economy as a whole, even if it helps bottom-line earnings in the short term.
Unemployment Claims
With better than expected Nonfarm Payroll data last week and a weekly unemployment number that is trending down it will be interesting to see how this reports. Another lower-than-expected number could further bolster equities in the rally that has been happening over the last few weeks. If we come in high however it would be contradictory to the other jobs data coming out and it could be a sign for the market to pause and digest the recent move. This comes out before the market opens so either way you should be able to see how the futures react and build out a trading thesis from there.
Final Wholesale Inventories
This is a report that does not get covered often but is possible to start to hold more and more significance as the year progresses. With a recession, inflation, and a “soft landing” still being tossed around in the press this number looks at what wholesalers are viewing as the near future for the economy. If the number builds it could be due to several factors, a best case is a return to normal post the covid supply issues, it could also mean fewer orders from retail which points to a slowing economy. On the flip side, a decrease could be due to a higher demand which could point to a stronger future economic outlook.
ISM Services PMI
Last but not least, we have the ISM Services PMI. This could be a boom for the economy and the stock market if we come in with another expansion signal. A decline might have the opposite effect though. The market seems to be looking for any reason to continue a rally though, so any news may be new news at this point. Keep in mind, the services sector is a big player in the US economy, so any big surprises could really move the market.
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.
