The U.S. stock market may get off to a slightly higher start today, as investors look to digest the gains logged at the end of last week. Overnight, the markets in Europe have been making some progress, while the broader equity futures have been somewhat mixed in premarket trading. This week traders will be concentrating on corporate profits, while also looking over the latest economic news.
On the economic front, today will be somewhat uneventful. However, later in the week a couple of important reports are scheduled to be released. On Thursday, the initial estimate of GDP (Gross Domestic Product) for the fourth quarter will be published. Most analysts think the economy expanded at an annualized rate of about 2.8% for the quarter, despite a somewhat challenging environment. This release will be important, as concerns about an impending recession have become pronounced. Later this week, the PCE (Personal Consumption and Expenditures) Price Index for December will be published. This report measures the prices that people pay for various goods and services, and is closely watched by the Federal Reserve. The numbers may well show that inflation continues to ease in many areas, but still stands above the central bank’s 2% target.
Lately, some traders have suggested that the Fed may need to adjust its expectations, if a deep recession is to be avoided. Meanwhile, the Federal Open Market Committee (FOMC) will meet next week, and issue another interest-rate decision. Although a small rate hike will probably be approved, any sign that the Federal Reserve may soon take a pause would be well received.
In corporate news, the fourth-quarter earnings season is in full swing. Today, few widely followed companies will deliver reports. However, news that an activist investor has taken a position in a leading technology name Salesforce Inc. (CRM) may influence the trading session. Tomorrow, we will hear from Microsoft (MSFT). Given the company’s size, this issuance could have implications from the broader technology sector. Wednesday, Tesla (TSLA) will weigh in with its numbers. Here, investors will be looking to see how the leading electric car manufacturer has been faring now that other large auto companies have started to enter the marketplace.
From a technical vantage point, the stock market has managed to make some progress since the start of the year. The S&P 500 Index is now sitting at its 200-day moving average (situated at the 3,970 level), and it remains to be seen if traders can drive equities higher from here. Notably, technology stocks have been acting better lately, which is an important development. The tech issues have played a critical role in past bull markets, and renewed interest in this group may signal that sentiment is improving.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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