Fed Funds, PMI and Other Can't Miss Items This Week

We had some wild trading last week with both CPI and PPI coming in hotter than expected. CPI came in slightly elevated, and the market rallied after some initial selling. PPI, which came in slightly more elevated, had the opposite reaction: some initial buying followed by a lot of selling. 

Tesla TSLA also had a rough week last week seeing some sustained selling throughout almost the entire week. It finished the week down over 6%. 

Bitcoin rallied to take out new all-time highs which also helped the markets out with strength in the cryptocurrency sector starting to be correlated to strength in the general market. This week we have a lot of excitement on deck, with the top item being the Fed Funds Rate on Wednesday.

Here are 5 things to watch this week in the Market.

Earnings

Earnings are winding down, with only a few noteworthy names out this week. First up on Wednesday is Micron Technologies MU, which is another chip maker similar to Nvidia and Advanced Micro Devices AMD. Based on how the other two have behaved, watch for AI contracts/talks to be brought up a lot in the call as every tech company looks to pivot further into the space.

The other two big names to watch this week are out Thursday after the market closes. Nike NKE is a big consumer brand, and given all the news lately about consumer spending and raising credit balances, watching for the sales numbers here could be indicative of the rest of the year. Adidas reported last week a big miss on sales and they are reported as saying to expect the same the rest of the year, so we will see if Nike will follow suit.

The second name out is FedEx FDX, which is more of a gauge of online sales. They handle a lot of the shipping traffic around the country for consumer goods, so watching their report and outlook could tell about the coming months of retail sales.

Fed Funds

The big news of the week is the Fed Funds rate out Wednesday. Originally the Fed was looking to initiate a cut in March, but that has since moved to June and now may be moving even further out than that. The rate is expected to remain unchanged at 5.50%, but the real mover may be the conference after it. If Powell starts walking back cuts this year further we could start to see the market sell on lost hopes of lower rates. If he stands firm that there will be cuts this year we could really see the market move on the expectation of cheaper money being available again.

PMI’s

Both the Flash Manufacturing and Services PMI are out Thursday morning. Given the tough inflation numbers that came in last week and the weaker retail sales, these could go either way. If they come in better than expected and show expansion in the market we could potentially see a market drop as it could be a sign of a persistently strong economy with still overheated inflation. If we contract we could see some buying step in on the hopes June cuts are still on the table.

Housing Data

There is housing data scattered throughout the entire week. We have Building Permits and Housing starts out Tuesday and both of these look to measure new construction in real estate. An improvement in these could see the market rally on the potential of a looser housing market. In the same vein, we have Existing home sales on Thursday which has been fairly stable lately. Any large deviation could see the market move on either a loosening or tightening of residential real estate.

Global Tension

Global conflict is sadly still in the news cycle. With Russia opening up the potential for Nuclear usage and France escalating the situation this could be something to watch that would move markets. In addition to that, global commerce still is at risk with the attacks in the Red Sea still a constant threat. This has caused many logistics companies to take longer routers causing delays in production and goods delivery. All of these things have some market-moving potential.

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.