Last week was a big one, showing a large shift in the Fed's actions as they cut rates by 50 basis points. This was a strong show that they feel inflation is finally in the right range, making them comfortable to start cutting. The market went on a huge rally, with the S&P 500 ($SPX) (SPY) hitting almost 5,800 for the first time after the announcement.
This week should be a lot less exciting from a news perspective, but there are still several announcements to be aware of.
Here are 5 things to watch this week in the market.
Flash PMI
First up on Monday are the Flash Services and Flash Manufacturing PMI. Now that it appears the Fed is back to a cutting regime, it would make sense that they would want to see the economy maintain some strength. So, if both of these beat, we could see the market rally, and if they miss we could see the market sell. If they come out mixed it could produce a lot of back-and-forth trading as volatility subsides.
Consumer Confidence
Tuesday at 10 am is Consumer Confidence, which while could cause the market to move, more than likely will show how the surveyed individuals view the economy. It's possible that with the appearance of more rate cuts, we see this number come in positive and that the market will react similarly.
Final GDP
Thursday morning before the market opens the Final GDP for the quarter ending June 30 comes out. This is a big release for obvious reasons as it shows just how strong the economy is. This also could have some outside effects given the rate cuts this past week, if it comes in better than expected it could look like Powell timed the cut perfectly and the market could rally. If it comes in and shows a weaker economy, then we could see some softness in the market.
FOMC Speakers and Powell
There are several FOMC speakers throughout the entire week and Powell is delivering opening remarks at the Treasury Market Conference in New York. Any time any of the FOMC members speak it can cause some volatility in the indexes and stocks, especially the high beta tech names. Any indication of future rate cuts could be seen as incredibly bullish and could cause markets to move quickly. It will be important to watch them this week.
Core PCE
Finally, on Friday morning Core PCE is due out. This is the Fed's favorite measure of inflation and what they base some of their decisions on. Anything that shows continually stable or receding inflation could be seen as a greenlight for more rate cuts and a positive for the economy as a whole. Anything higher than the expected 0.2% number could show that price inflation is not yet under control and could cause some fear to creep back into the market. The odds that rates go back up are slim, but if inflation is creeping back in that can seriously impact the consumer and investor.
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.
