Earnings last week proved to be exciting with many companies posting better-than-expected results and their stocks reacting the next session. Microsoft (MSFT) comes to mind with a better-than-expected release, the stock popped the following session and then slowly proceeded to fill the gap. Even with that gap filled it still managed to close the week up almost 1%.
In addition to Microsoft, we had Amazon (AMZN) report on Thursday with a large beat and the stock continued to rally all through Friday to close the week up over 2%. These are impressive closes given the fact that the overall market, measured here through the S&P 500 ($SPX) (SPY), closed the week down over 2.50%.
This week we have more earnings in store as well as what a lot of the markets are waiting for: The Fed Funds rate. Here are 5 things to watch this week in the market.
Earnings
Coming out this week we have McDonalds (MCD) on Monday before the market opens along with HSBC. Tuesday has some heavy hitters with Pfizer (PFE), Advanced Micro Devices (AMD), Anheuser-Busch (BUD) and Caterpillar (CAT). BUD will be an interesting watch as they recently announced a huge brand sponsorship with the UFC. Thursday after the market closes, Apple (AAPL) reports. This could really be one to watch due to the fact that Apple is so heavily intertwined in the market. If Apple misses or investors don’t like what they hear, it's possible that it takes the whole market with it if it falls.
Consumer Confidence
On the news front, one of the first important releases is Tuesday at 10 a.m. Eastern with Consumer Confidence. This report may not move the market much but it can be a good forward-looking indicator of how the overall economy is viewed. It will be interesting to watch this with the Fed setting their new rates on Wednesday, if this comes in hot we may see the Fed step up rates again to really help cool the economy off. If we come in cool then it's possible the Fed keeps the same rate or perhaps even cuts.
JOLTS Job Opening
Wednesday morning at 10 a.m. Eastern is the Jolts Job opening. The Fed continually talks about the tight labor market so watching this could be an important signal heading into the Fed release later Wednesday.
FOMC Statement/Rate
The new Fed Funds rate is released Wednesday at 2 p.m. Eastern. They are expected to hold steady at 5.50%. If there is a surprise hike, it's possible we start to see a chain reaction move through futures and equities as the market could fear additional interest rate hikes. This could also potentially carry over into the Bond markets as well.
If there is a continued hold at 5.50% then looking at both the statement and the press conference at 2:30 could be important to see how and why the Fed made the decision it did. If it's because it thinks inflation is under control we could see a rally, if it's because they are waiting to hike at a later date we could see the market rollover.
In addition, the press conference at 2:30 also can cause some volatility as Powell takes questions from reporters and explains what he and the other voting members are looking at both now and going forward.
Non-Farm Employment Change
Non-farm payrolls are out Friday morning at 8:30 a.m. Eastern. After last month's hefty beat, eyes could be on the language in the report to see if any of those additions get rolled back and revised lower. If the market likes the Fed meeting results from earlier this week, it's possible that both a beat or a miss can cause the market to rally. If it does not like the language Powell uses or the new Fed Funds rate, it's possible the market will look to a healthy jobs report to keep it stable.
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.
