It was a great week in the overall market this week. The S&P 500 ($SPX) (SPY) finished up over 1% with most of that run coming in the second half of the week. One of the top performers of the past week was Nvidia (NVDA) which was up almost 10% on the week last week.
On top of these, there were many other fantastic trades to catch as earnings started to wind down. This week will hopefully be as exciting with several news events that could really move the market. If you mix in the debt ceiling talk in the US then we would be poised for a very tradable week! Here are 5 things to watch in the market this week!
Yellen Speaking
Whenever a high-ranking official like the Secretary of the Treasury speaks, the market listens. Depending on the content of her speech, we could see effects on market sentiment and ripple effects through the market. If Secretary Yellen provides positive insights into the state of the US economy or outlines future fiscal policy plans, this could provide a tailwind for the market. Conversely, if she signals concerns about economic growth or inflation, this could pitch the market into a risk-off state and we could see a sell-off start to occur.
FOMC Minutes
It's FOMC Meeting Minutes time again! The Meeting minutes are almost always a high-impact event. These minutes provide detailed insights into the Federal Reserve's view of the economy and potential future monetary policy actions. If the minutes show a consensus among committee members for a continually tightening monetary policy (e.g., raising interest rates or reducing asset purchases), The market could see that as problematic and start to retreat. On the other hand, if the minutes suggest a dovish stance (i.e., maintaining or even increasing monetary stimulus), the market could see that as risk again and we would be looking at a more sustained upward move. As the saying goes in trading “Don’t Fight the Fed”.
Prelim GDP
Preliminary GDP is a measure of economic activity and health. The preliminary GDP figures for the quarter, forecasted to be 1.1%, will most likely be closely watched by market participants. If the actual GDP growth exceeds this forecast, it could indicate a stronger-than-expected economy. If GDP growth is lower than forecasted, it could add to the concerns about an economic slowdown, especially given the trend in the actual over the past few quarters.
Core PCE
The Core Personal Consumption Expenditures (PCE) Price Index is a key measure of inflation used by the Fed. An increase in this index could indicate rising inflation, which might prompt the Fed to raise interest rates, which could put some pressure on the market. Conversely, a decrease or lower-than-expected increase could signal low inflation, potentially leading the Fed to maintain or even lower interest rates, which could help to foster a risk on the environment in stocks.
Durable Goods
Durable goods orders are a measure of the demand for products with a lifespan of more than three years (like appliances and vehicles), which is often seen as an indicator of consumer and business confidence in the economy's future. An increase in durable goods often means confidence in future economic conditions, conversely, a drop in orders means that consumers could be starting to stockpile more capital in fear of more economic problems in the near future. The historical numbers over the past 6 months have been all over the map, so it's anyone's guess where this goes.
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.
