The FOMC did not disappoint last week throwing the market into a nosedive as Powell came out to say that he thought there was one more rate hike in store for 2023 and that we would need to keep rates higher for longer. With all this drama the S&P 500 ($SPX) (SPY) ended down nearly 3% on the week. Some other favorites also had a rough week with Tesla (TSLA) down over 10% on the week and Nvidia (NVDA) down over 5%.
There are a few notable earnings releases this week as well as some potentially market-moving news. Here are 5 things to watch in the market this week.
Consumer Confidence
This is due out at 10 a.m. on Tuesday and could hold some particular importance this week. With the Fed talking about keeping rates elevated and the market looking like fear could be starting to drip in, a weak confidence number could further spook the markets and fuel some additional selling pressure.
New Home Sales
This is also due on Tuesday at 10 a.m. With all of the housing and rate information in the news cycle as of late, this could be a possible indicator of economic issues to come. The past 6 releases have all been revised down in a pretty big way, and this trend could continue as credit markets appear to be slowing down. While this may not directly affect the market at the moment, it can be an important indicator to signal future economic conditions.
Final GDP
Final GDP is due out for the Quarter ending in June, and this is usually considered the measure of a recession or not. With all of the talk about the markets and the possibility of a recession, this could really be a market mover and set the pace for the day and the rest of the week. The previous releases have been pretty sporadic with negative and positive numbers existing all in the same year. Given the rate cycle we appear to be in, it's possible that a miss is actually a positive event for the market and that a beat is seen as negative. Another potentially important part of the report is any revision to prior quarter GDPs. This will give us a better understanding of where the economy is potentially heading.
Energy
This is not a news release, just a general market force that appears to also be back in the news cycle. With Oil and other fossil fuels driving most of the modern world when prices spike there are often rippling effects through the markets. Everything is either made or transported with it so end-user products often end up costlier, in addition, the northern hemisphere is getting ready to head into winter so heating will be another potential concern. If prices stay elevated it's possible that we see some additional pressure on the markets in addition to slower consumer demand as wages need to be diverted to other things like heat and food. This is not something that is likely to have an immediate effect on the market but is more of a macro theme to keep an eye on.
Earnings
Finally, we have some earnings reports due out this week that could potentially move the markets and show us where consumers are allocating their money. Costco (COST) reports on Tuesday after the market closes. This is typically a solid precursor to slow consumer growth as people spend more time buying in bulk when they have the money. Listening to their outlook for the next year could be of particular importance. Thursday we have two potentially important releases with Nike (NKE) and CarMax (KMX). Both are in the consumer goods space so seeing how they view the coming year could be very telling about market and economic conditions. Finally on Friday Carnival Cruise (CCL) reports. This is potentially important because vacations are often the first thing to get cut when times get tough.
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.
