With it being a short week last week and with a lower volume environment, the market did its usual low volume melt up and the S&P 500 ($SPX) (SPY) finished the week up over 1%. Additionally, we had the FOMC meeting minutes which caused a slight bump in volatility but left the market more or less unconcerned by the release. Finally, we had Nvidia (NVDA) earnings come out, and while it was an earnings beat, the stock topped out and retraced the second half of the week to close down over 3%.
This week should be back to normal volume-wise as the market resumes normal trading hours for the entire week. Still in the midst of earnings season, we have Toronto Dominion Bank and Salesforce due out as well as the normal news. Here are 5 themes to watch in the market this week.
Earnings
Impactful earnings are finally starting to taper over a bit with only a few really notable ones this week. Wednesday appears to potentially be the most impactful with Salesforce (CRM), Dollar Tree (DLTR), and Hormel Foods (HRL). Salesforce is often a popular trading stock and deeply integrated into a lot of businesses, so watching their guidance and sales numbers could be telling about the business atmosphere. Hormel and Dollar Tree are staples for shopping and often see a spike in business during economic turbulence so if they see sales increasing and issue a positive guidance it could be seen as a potential indicator for economic turbulence ahead. Two fairly large releases are also due Thursday with Royal Bank of Canada (RY) and Toronto Dominion Bank. Both are large Canadian banks and have an impact on the US banking system due to their presence across the US, especially TD. Watching how they offer guidance for the upcoming quarters could be a view into where they think rates are heading.
New Home Sales
Monday at 10 am New Home Sales are out. Large purchases like homes are often considered a good indicator of economic health so continuing to watch how both New Home Sales and Existing Home Sales report could be a window into overall economic health. As far as how the market reacts, if we beat and the housing market is still hot it's possible we see the market fade as it could be seen as a reason for the Fed to hold rates high or even possibly hike them again. If it's a miss it's possible the market rallies on the hopes of a Fed Cut.
Preliminary GDP numbers
Wednesday the Preliminary GDP and any GDP number often move the market around. The last preliminary number in August was 2.1% which was a miss and this quarter they are forecasting a 5% preliminary result. If it's a hit or a beat, the markets could strongly rally on such strong economic growth, if it's a miss we could see the markets start to soften again on a weaker-than-expected economy.
OPEC-JMMC Meetings
All day Thursday OPEC and the JMMC meet to discuss all things energy including output and production and sales. This is a closed-door meeting, but often times between meetings the members talk with the press about the discussions that have been happening. Heading into the coldest part of the year for the North as well as the Holidays, any news about tightening supply could be met with some fear in the equities markets and with a jump in the energy markets. Seeing as energy prices impact almost all aspects of life, keeping an eye on these meetings could help to give insight into price changes in the coming months.
Fed Speakers
There are a plethora of Fed speakers this week and these speeches have the potential to move the markets as they talk about interest rates and overall economic health. They all culminate on Friday with Powell speaking at a fireside chat about Economic Mobility. Anytime Powell speaks it's possible to see an increase in volatility.
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.
