The U.S. stock market may make some progress this morning, as a fresh week on Wall Street begins. In Europe, the markets have been pressing ahead, and closer to home, the U.S. equity futures have been advancing in early morning trading.
In the days ahead, investors may try to regain their balance, after a dismal inflation report put a damper on sentiment last week. Specifically, on Friday the Personal Consumption Expenditures (PCE) Index showed prices rising 5.4% for the month of January (year over year). That news, along with hawkish comments from central bank officials, had Wall Street quite worried.
In the economic arena, numerous reports will be released this week. The housing market will certainly be one area of focus. Today, we will get a look at pending home sales for the month of January, and tomorrow a report on housing prices will be published. The real estate markets are an important part of the broader economy, but have started to come under pressure lately, owing to a rising mortgage rate environment. In addition, tomorrow the Conference Board will release the Consumer Confidence Index for the month of February. Most analysts expect that the numbers will show that consumers remain optimistic about current conditions. Notably, many individuals may have concerns about the economy, but a strong labor market seems to be keeping confidence from slipping too much.
In corporate news, a handful of corporations are set to post profit reports this week. We will be hearing from numerous retailers, including Target (TGT). In addition, a few large technology companies, such as Salesforce.com (CRM) and Snowflake (SNOW), will weigh in with their numbers. For the most part, corporations have been working to adopt to a challenging economic backdrop by cutting staff and curtailing spending on large capital projects. Nonetheless, profits have come under pressure and guidance has been soft. Ultimately, this can create difficult market conditions, especially when stocks are trading at valuations that might not seem justified.
From a technical perspective, the S&P 500 Index pulled back during the month of February, surrendering roughly 50% of the gains logged in January. The index is currently sitting near its 200-day moving average, located around the 3,950 mark. Many traders may be watching to see if this technical level might provide some support. Looking ahead, the market environment is still quite challenging, and some volatility should be expected.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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