The U.S. stock market may get off to a muted start this morning, as traders digest last week’s gains. At the time of this writing, the S&P 500 Index futures were hovering around the neutral line in pre-market trading. In the coming days, investors will receive a number of important economic releases, including a key inflation reading, and another batch of corporate profit reports.
In economic news, today should be relatively calm, as the new home sales report is the only item scheduled. Tomorrow, we will get a look at the latest monthly Consumer Confidence Index, which should hold some importance for investors. Meanwhile, the main event this week will take place on Thursday, when the PCE (Personal Consumption and Expenditures) Price Index will be published. Analysts currently expect this report will show that prices rose about 2.4% during the month of January, year over year. It is worth mentioning that this issuance will be closely watched by the Federal Reserve, which remains staunchly committed to bringing inflation down to the 2% mark. Achieving this feat has proven challenging, but the central bank has suggested that if all goes well, it plans to reduce interest rates in the near future.
In the corporate arena, the fourth-quarter earnings season is starting to wind down. Nonetheless, some important reports are still being released. This week we will hear from Lowe’s (LOW), a home improvement retailer. Salesforce (CRM), a provider of enterprise software and member of the Dow Jones Industrial Average, will also post its numbers. Furthermore, a report from Snowflake (SNOW), a data analytics provider focused on AI (artificial intelligence), should attract some attention from technology investors.
The S&P 500 Index recently managed to move beyond the 5,000 mark, which was a technical accomplishment. Nonetheless, some investors seem worried that the market has been rising at a pace that is unsustainable. Notably, many stocks have logged sizable gains over the past few months, and some traders may be reluctant to initiate new purchases at these levels. Looking ahead, it will be critical that corporations deliver profits that can justify current equity valuations. In addition, Wall Street is still expecting that the Fed will reduce interest rates later this year. If for some reason this course of action fails to materialize, the market could become volatile. – Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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