Though the U.S. stock market staged a nice recovery last week, it remains to be seen if traders can extend those gains in the days ahead. In particular, Wall Street will be watching the hostilities taking place between Russia and Ukraine, with the hope that a peace agreement can be reached soon. In addition to the severe humanitarian toll, investors are wondering how the conflict might impact the global economy; so far, the situation in the United States seems to be reasonably stable, although elevated energy prices remain a concern.
On the economic front, there are no major reports scheduled for today or tomorrow. On Wednesday, new home sales for the month of February will be reported, followed by the pending home sales number later in the week. The housing market represents a major part of the economy, and many analysts will be paying close attention to these reports. It will be important to see if the housing market remains strong, despite higher interest rates and rising capital costs. It should be noted that the residential construction industry tends to be sensitive to rising prices for materials and labor.
In corporate news, a handful of widely-followed companies will weigh in with their quarterly results this week. After the market closes today, we hear from NIKE (NKE). Many investors will want to see how the athletic apparel manufacturer has been coping with business disruptions overseas, supply-chain problems, and ongoing inflationary pressures. Then, on Tuesday, Adobe (ADBE)—one of the largest software designers—delivers its report; its numbers and the guidance being provided will be carefully reviewed by traders interested in the technology sector. On Wednesday General Mills (GIS), a leading manufacturer of packaged foods will report its results.
On a technical level, the stock market rebounded considerably last week, pushing the S&P 500 Index back above its 50-day moving average (located near the 4,430 mark). This key achievement has certainly been noticed by traders that adhere to technical systems, and may spur on the bulls. Looking ahead, it remains to be seen if the market can move directly higher from here, or if a period of consolidation might be needed. Portfolio managers may use the recent rally to reposition their holdings. We have noticed that the more dynamic technology stocks have started to attract some attention, and this may suggest that investor sentiment is improving.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
