The U.S. stock market looks to get off to a positive start this morning, as a new week on Wall Street commences. In the days ahead, investors will receive another key inflation reading, while also waiting for the first quarter earnings season to begin. As we were publishing this report, the S&P 500 Index futures had nudged above the neutral line.
In economic news, there are no major items scheduled for today or tomorrow. However, on Wednesday the latest monthly CPI (Consumer Price Index) will be released. Analysts expect the numbers to show that consumer prices rose 3.5% during the month of March, year-over-year. Although this result would be slightly higher than the figure logged in February, the core CPI (excludes volatile food and energy items) is expected to present a more favorable comparison. On Thursday, the PPI (Producer Price Index) will be released and should also receive some attention. Clearly, investors will be paying attention to these reports, as tamer inflation readings may be needed to convince the Federal Reserve to cut interest rates. At this point, most investors still think the Federal Reserve will reduce rates this year, but there’s no longer a consensus on how much. However, it should be noted that the economy has been quite strong, and it is not clear that too much monetary easing is now warranted. Also this week, the FOMC (Federal Open Market Committee) will publish the minutes from its latest meeting, and investors will be carefully looking over this release.
In the corporate sector, the first quarter earnings season begins later this week. On Friday, we will receive reports from a number of big banks, including JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C). These releases will be of some importance, as banks are an essential part of the nation’s economy. Notably, financial institutions lend to a wide assortment of consumer and commercial customers, and their results can be quite informative. Further, investors will be looking for confirmation that the banks are in sound financial shape with healthy balance sheets and ample liquidity.
Technically, the stock market has already made significant progress during the first months of 2024. At this juncture, investors will clearly want to see that corporations are logging healthy profits and providing supportive guidance. This is especially important, as traders are gradually realizing that the Federal Reserve may not cut interest rates as much as had been expected. Elsewhere, political and military tensions around the globe, if left unchecked, could also impact the direction of the market. – Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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