The U.S. stock market may get off to a muted start this morning, following last Friday’s strong session. At the time that we were writing this update, the S&P 500 Index futures were down roughly 20 points (-0.35%) in pre-market trading. This week, investors will turn their attention to the Federal Reserve, while also keeping an eye on the corporate sector. Tariffs and international trade will also likely be an ongoing market theme.
In economic news, the monthly U.S. Retail Sales report was released early this morning. Specifically, sales rose just 0.2% in February, falling short of expectations. The report also follows the weak figure logged in January. The lackluster report suggests that the consumer may be turning a bit cautious, and probably won’t help investor sentiment much. Looking ahead, on Wednesday the FOMC (Federal Open Market Committee) will conclude its two-day policy meeting with an interest-rate announcement. Few analysts think that rates will be altered at this time. However, Chairman Jerome Powell will be providing some commentary that will be closely followed. It should be noted that a softer tone and the suggestion of additional rate cuts could potentially drive the market higher. It is also worth mentioning that a number of housing-related reports will be released throughout the week.
There are a handful of notable corporations reporting this week. On Wednesday, we will hear from General Mills (GIS) and Williams-Sonoma (WSM). On Thursday, NIKE (NKE) and FedEx (FDX) and will post their results. On Friday, we will hear from Carnival Corp. (CCL). For the most part, corporations have been delivering respectable reports. However, many management teams are starting to mention tariffs during conference calls, and this may be of concern heading into the first-quarter earnings season.
Technically, the stock market may be starting to stabilize. Last Friday, buyers stepped in with some force, which was an encouraging development. However, it remains to be seen if the bulls can mount a sustained buying campaign and produce a meaningful rally. From a sector perspective, all the major equity groups participated in last Friday’s advance, suggesting broad-based participation. In addition, capital started to rotate back into the technology issues, which was also a constructive move. It should be noted that a handful of large technology stocks make up a sizable percentage of the S&P 500 Index’s market capitalization. As a result, a major market advance will most likely have to include the technology sector. –Adam Rosner
At the time of this article’s writing, the author had a position in NIKE and Carnival.
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