The U.S. stock market seems set for a muted start this morning, as traders return from a three-day holiday weekend. The markets in Europe remain closed, but on our shores the S&P 500 futures have been under some pressure in early morning trading. This week Wall Street will be digesting the March employment numbers that were released last Friday. That report showed 236,000 jobs were added to the economy last month, while the headline unemployment rate dipped to the 3.5% mark. The report was generally constructive, however some traders may still worry that the Federal Reserve will see the need for action. In addition, investors will be looking at some key inflation data, and gearing up for the start of the first quarter earnings season.
In economic news, there are no major economic reports slated for this morning. However, on Wednesday the Consumer Price Index (CPI) for the month of March will be released. Most analysts expect that consumer prices rose roughly 5% during the month (year over year), which would be an elevated figure, but a step in the right direction. On Thursday, the Producer Price Index (PPI) will follow. Clearly, the nation’s battle with inflation has been difficult. The Federal Reserve has hiked interest rates aggressively over the past year and the impact has been slow to materialize. However, given the problems emerging in the financial system, it seems the central bank may adopt a more measured approach.
In corporate news, the first quarter earnings season will kick off later this week, with the big banks posting their numbers. On Friday, we will hear from JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C). Investors will be paying close attention to these reports, as they could provide much needed information about the broader banking industry. Analysts currently anticipate that most corporations will post weak first-quarter numbers. However, there is always the possibility that expectations have become too negative, and that a number of companies will deliver encouraging results and offer supportive guidance.
From a technical perspective, the stock market seems to be holding up reasonably well, despite a somewhat challenging environment. Notably, the S&P 500 Index has managed to firm up after selling off dramatically in mid-March, and seems to be stabilizing. However, it remains to be seen if traders can push stocks higher from here, or if more consolidation is in order.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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