The U.S. stock market seems set for a soft start at the opening bell, as a new week on Wall Street begins. Overnight, the markets in Europe have been putting in mixed sessions. On our shores the S&P 500 futures have been under some pressure in pre-market trading. Once again, corporate profits will be the main area of focus for investors this week. However, there will be a few economic reports due out that should also receive some attention.
In economic news, today will be uneventful, with no major releases scheduled. However, tomorrow, the Conference Board will release its Consumer Confidence Index for the month of April. On Thursday, GDP (gross domestic product) for the first quarter will be reported. Here, the numbers will probably show that the economy expanded at an annualized rate of about 2% during the quarter. On Friday, the PCE (Personal Consumption Expenditures) Price Index for March will be published. These issuances will be closely watched by investors looking for confirmation that the economy is still in decent shape, and that inflationary pressures are abating. It should be noted that the FOMC (Federal Open Market Committee) is slated to meet in early May. Many investors still worry that the central bank committee will lift rates too aggressively, even as cracks have started to emerge across the banking sector.
In the corporate arena, the first-quarter earnings season continues to take shape. A number of high profile companies are slated to post results this week. This morning, Coca-Cola (KO) delivered a constructive report. First Republic Bank (FRC) weighs in after the close. Tomorrow, we will get a look at results from Alphabet (GOOG), Microsoft (MSFT), and McDonalds (MCD). So far, earnings season has been somewhat challenging, with most companies reporting lower quarterly profits and offering lackluster guidance. However, it should be noted that expectations have been low, and in some cases, investors have been surprised when the reported numbers were actually not so disappointing.
From a technical perspective, the stock market has staged a sizable advance over the past several weeks. However, it remains to be seen if further gains are in store, or if a period of consolidation may be needed. The recent news headlines have not been overly assuring, and many investors continue to worry about corporate layoffs, persistent inflation, high interest rates, and a potential recession. From a sector view, the market has been uneven, with leadership confined to a few groups. For instance, the technology stocks have displayed strength lately, but now seem to be softening, possibly due to valuation concerns after their upward move. Elsewhere, the financial issues have been lagging, and investors worry that problems in the banking industry may well resurface on a larger scale. – Adam Rosner
At the time of this article’s writing, the author had a position in Alphabet (GOOG).
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