The markets gave us some excitement last week with CPI coming in significantly hotter than expected. This pushed the markets down pretty significantly in trading following the release, but it ultimately turned out to just be a buying opportunity as by the time Friday was completed we were up significantly from the lows. Despite all the excitement though, the S&P 500 ($SPX) (SPY) still closed slightly red on the week.
The other big news last week was Super Micro Computer (SMCI) squeezing to over $1,000 a share at one point only to give back over 20% of the move on Friday.
This upcoming week there are a few things that are worth paying attention to and some larger companies reporting that could provide a solid outlook into the coming quarters.
Here are 5 things to watch this week in the market.
Bank Holiday
On Monday banks and markets are closed in the US for observance of Presidents Day. This could create a low liquidity environment Tuesday morning until all the bank desks are re-opened.
Earnings
With Monday being a Holiday, Tuesday is the first day this week we need to be concerned with Earnings reports. We have Walmart (WMT) and Home Depot (HD) reporting on Tuesday Morning. With these names, while the top and bottom line numbers are important it's the intangible parts of the report that could be more important. How their foot traffic is going, if they are seeing an increase or decrease in actual product quantity sold, and what their guidance is for the coming quarters could all be very telling about what they see coming for the general economy.
The other high-profile report is out Wednesday after the close and that is Nvidia (NVDA). Their last few earnings have been a real catalyst for price appreciation, but given how far the stock has moved in the last few months, it would need to have blowout earnings to really move the needle. In addition, several other companies are entering the AI chip space so seeing if Nvidia can hold their first mover advantage will be key for keeping the price of the stock in a continued up trend.
FOMC Minutes
This won’t be new information as it's just the explanation from the last rate decision, but the minute release usually causes some volatility in the markets as larger players try and see if they can gain an edge on the next rate decision. It may be more muted with this release though given how CPI and PPI came out last week showing that inflation is not yet as beaten as they thought.
Unemployment Claims
Unemployment claims are always an important part of the economy, so watching how this releases could set the tone for the day. If it comes in under estimates we could see the market pause or even possibly see some selling pressure. Given inflation was back last month, a stronger-than-expected workforce could cause the Fed to reconsider cuts and even consider a hike. This could spook the market. If we come in hotter than expected though we could see the market start to price in rate cuts in March and that could mean a higher S&P.
Flash PMI’s
Both Flash Services and Manufacturing PMI are due out at 9:45 on Friday. Similar to Unemployment, bad news could be good news for these reports. If they both report a contraction the market could view that as a positive in regards to rates and start to rally on the release. If the reports are mixed we could see just a spike in volatility while the market sorts it out. Finally, if they both come in strong we could see the market start to slide on a persistently strong US economy (at least by the 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.
