There was a lot of drama in the markets last week as inflation news hit the wires. CPI came out cooler than expected and after an initial news reaction up, we just trended down the entire day. PPI came out hotter than expected and after an initial move down, the market trended up most of the day. All of this is around the backdrop of the Fed not sure about how to signal rate decisions.
Bank earnings started and came out mostly better than expected which was positive for the individual names. Tesla (TSLA), on the other hand, had some huge swings intraday but ended the week mostly unchanged from the week before.
This week earnings are in full swing, we have some additional economic data and Powell is speaking again.
Here are 5 things to watch this week in the Market.
Earnings
Most of the earnings this week continue to be bank-related, with Goldman Sachs (GS) on Monday, Bank of America (BAC) on Tuesday with Morgan Stanely (MS), and American Express (AXP) on Friday. American Express is technically a credit card company but is getting looped in with the banks. Higher interest rates often help bank earnings, so it would not be a surprise to see banks continue to do well. One thing to watch will be if they report on loans past due/delinquency rates. Any spike in this could be foretelling for the economy as a whole.
The other name out this week is Netflix (NFLX) which is due out Thursday. This is a popular trading stock, and while it might not give any clues about the economy if the stock does exceptionally well or exceptionally poorly it could drag the entire market with it.
Powell Speaking
Powell is speaking again this week. This time it is Monday at noon Eastern and the Economic Club in Washington. While nothing specific is planned in terms of rate talks, anything he says could be interpreted as a clue about future rate decisions. This could cause some volatility around the event.
Empire State Manufacturing
Also out on Monday is the Empire State Manufacturing index. This index is a report on the general business conditions for respondents in the state of New York. The last 6 releases have all been negative, indicating contracting conditions, but last month was right around the zero level. If this comes in higher than zero the market could get a bump on positive economic news. If however, we continue to stay below zero, it would depend on whether we are around the estimate (-8.0) or not. If we miss by a large margin the market could see some selling pick up.
Retail Sales
Tuesday morning Retail Sales and Core Retail Sales are both due out. While both numbers are important, Core could carry a little more weight given that it excludes automobiles which have seen a huge increase in cost since COVID.
Anything over the estimated numbers could be seen as a positive by the market and could add some fuel to help move the market up. If we miss the estimates we could see the market start to sell off on the continued lack of consumer participation.
ECB Press Conference
The ECB might not typically affect the US markets, but as of late, there have been talks about them diverging from the Fed's plan to keep rates higher. If they start to diverge in any meaningful way it could put some pressure on the market to have Powell follow suit. This release could affect bonds more than stocks, but since the markets are partially linked it will be important to watch.
Best of luck this week and don’t forget to check out my daily options article.
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