The U.S. stock market seems poised to move higher at the opening bell this morning, as we embark on a new week. Over the next few days, traders will receive an important inflation report, as well as another batch of corporate earnings releases. In addition, attention will likely be paid to the unsettling situation in the Middle East, as political and military developments there can have an impact on the commodity and financial markets. As we were writing this report, the S&P 500 Index futures were ahead roughly 28 points (0.55%) in pre-market trading, with other major indexes moving roughly in tandem.
Traders will receive a number of economic releases this week. However, a couple of items will likely stand out from the pack. On Thursday, the advanced estimate of first-quarter GDP (gross domestic product) will be published. The report is expected to show that the economy expanded at around 2.2% (annualized) during the period. On Friday, the March PCE (Personal Consumption Expenditures) Price Index will be reported. Here, analysts think the numbers will indicate that prices increased roughly 2.6% during the month on a year-over-year basis. Clearly, any indication that inflation is easing would be welcomed by Wall Street, as it might convince the Federal Reserve to lower interest rates.
In corporate news, the first-quarter earnings season is now in full swing. This week we will receive reports from a handful of major technology companies, including Tesla (TSLA), Meta Platforms (META), Alphabet (GOOG), and Microsoft (MSFT). Clearly, these companies are industry leaders and their reports will likely have some impact on trading this week.
The stock market started to pull back at the start of April, and has weakened further as the month has progressed. For perspective, the market is now about 5.5% below its recent high. Technically, the S&P 500 Index recently broke through its 50-day moving average (situated at the 5,120 level), and this development may have some traders concerned. On a related note, the CBOE Volatility Index (VIX), which is known as Wall Street’s fear gauge, has started to move higher, suggesting that the mood is becoming less complacent. Looking ahead, it is not clear where the market may find support. However, it should be noted that stocks did stage a sizable advance over the past several months, leading to stretched valuations in many cases. As a result, a pause in the action here should not come as a major surprise. – Adam Rosner
At the time of this article’s writing, the author had positions in Alphabet (GOOG).
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