Stocks closed this week near record highs as one of the busiest weeks of the quarter is set to greet investors.
Earnings for five of the “Magnificent Seven” tech stocks — Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN) and Meta (META) — followed a jam-packed week of quarterly reports. It will highlight it. A total of 106 S&P 500 companies, including six Dow constituents, are scheduled to report in the coming week, according to FactSet.
On Wednesday afternoon, the Fed is scheduled to announce its latest policy decision. Investors expect the central bank to keep interest rates unchanged in the range of 5.25% to 5.50%. Investors are closely watching Fed Chairman Jerome Powell's comments at Wednesday's press conference on when the Federal Reserve will start cutting interest rates.
January jobs data is due to be released on Friday, and economists expect job growth to decline slightly, while the unemployment rate is expected to remain flat at 3.7%.
Elsewhere in the schedule, important updates on activity in the economy's manufacturing and services sectors, as well as the latest data on jobs, highlight the economic side of things.
Outside of big tech, AMD (AMD), Starbucks (SBUX), Pfizer (PFE), CVX), Exxon Mobil (XOM), and Boeing (BA) have topped the reporting calendar.
Stocks will enter the last week of the month near all-time highs. After a shaky start to the year, the S&P 500 Index (^GSPC) and Nasdaq Composite Index (^IXIC) are both up more than 2% in January. Meanwhile, the Dow Jones Industrial Average (^DJI) is up more than 1%.
Market views have changed significantly since Jerome Powell last took the stage in December. Investors had been aggressively pricing in a rate cut in March, but have since pared back their bets as economic growth continues to show unexpected upside.
But with inflation falling to its lowest level in nearly three years, many Wall Street economists still believe the Fed will begin lowering rates in the near future.
“The time has come for Fed officials to score a victory and begin lowering the level of policy restrictions in the near term,” Andrew Hunter, deputy chief U.S. economist at Capital Economics, said in a note to clients on Friday.
Investors are still divided on when this rate cut will occur. As of Friday afternoon, the market was pricing in a 47% chance that the Fed would cut interest rates in March, according to the CME FedWatch tool. Looking ahead to May, investors believe there is an 88% chance that rates will fall by the end of the meeting.
Michael Gapen, U.S. economist at Bank of America, expects the Fed to change its post-meeting statement to be more neutral about the restrictiveness of its policy, resulting in a “de facto easing bias.” But he doesn't believe Mr. Powell and the central bank are fully tied together just yet.
“While the labor market has cooled and inflation has fallen more rapidly than expected despite the lack of a significant increase in unemployment, the Fed is still prepared to send a strong signal about its intentions,” Gapen said. I don't think there is,” he wrote in a memo. Friday customers.
Gapen believes the Fed will buy time to review more data. And some of that data is expected to be released in the days after the Fed meeting.
The January employment report is scheduled to be released Friday at 8:30 a.m. ET. While layoffs have dominated the headlines in recent weeks, economists expect the data to continue to show no signs of a broader labor market slowdown.
The report is expected to show that job losses added 175,000 nonfarm jobs to the U.S. economy last month. It rose slightly to 3.8%, according to Bloomberg data. The U.S. economy added 2.16 million jobs in December, but the unemployment rate remained unchanged at 3.7%.
“Overall, the themes of improving supply, cooling demand, and general labor market normalization are likely to continue in January,” Wells Fargo economists led by Jay Bryson wrote in a weekly note to clients. “It's expensive.” “While employment growth has remained remarkably strong recently, there are some signs that it will slow further in the coming months. On a net basis, fewer industries are adding jobs each month, and fewer jobs are being added each month. Plans keep going backwards.”
As if the economic calendar wasn't enough to alarm investors, the biggest corporate earnings week of the year will lay the groundwork for how companies will hold up in a high interest rate environment.
Friday's FactSet analysis shows how much future earnings could move the market. Excluding Tesla, the other “Magnificent Seven” tech stocks are expected to be among the top six revenue drivers on the S&P 500, contributing to 53.7% year-over-year profit growth. Excluding these six companies, the remaining 494 companies would report a 10.5% decline in their profits.
Five of these major companies, Alphabet, Microsoft, Meta, Amazon, and Apple, are expected to release their reports within the next week.
Evercore ISI managing director Julien Emanuel said the stock price reaction to these reports was “crucial to the overall direction of the market”.
weekly calendar
Monday
Economic data: Dallas Fed Manufacturing Activity, January (previously -9.3)
Revenue: Cleveland Cliffs (CLF) Phillips (PHG), SoFi Technologies (SOFI), Whirlpool (WHR)
Tuesday:
Economic data: S&P CoreLogic 20 City YoY NSA (4.87% YoY). Conference Board Consumer Confidence Index, January (estimated 112.5, previously 110.7) JOLTS job openings, December (previously 8.79 million). Dallas Fed Service Activity, January (previous year -8.7)
Revenue: Advanced Micro Devices (AMD), Alphabet (GOOGL), Electronic Arts (EA), General Motors (GM), JetBlue (JBLU), Juniper Networks (JNP), Match Group (MTCH), Marathon Petroleum Corporation (MPC), Microsoft ( MSFT), Pfizer (PFE), Starbucks (SBUX), UPS (UPS)
Wednesday
Economic data: MBA home loan applications, week ended January 26 (3.7%). ADP private salary, January (expected +150,000, previous +164,000). Fourth quarter employment cost index (expected 1.0%, previously 1.1%) Federal Reserve monetary policy decisions (no interest rate changes expected)
Revenue: Aflac (AFL), Boeing (BA), Hess (HES), Mastercard (MA), MetLife (MET), Novo Nordisk (NVO), Philips 66 (PSX), Qualcomm (QCOM)
Thursday
Economic data: Challenger employment reduction compared to the same month last year, January (-20.2% compared to the previous year). Unit labor costs, Q4 (+2.6% expected, -1.2% previously). Non-agricultural productivity, Q4 (+1.6% expected, +5.2% previously). Number of new unemployment insurance claims for the week ending January 27 (previously 214,000). S&P Global US Manufacturing PMI, finalized for January (previously 50.3). December construction expenditure compared to the previous month (expected 0.5% increase, previous 0.4% increase). ISM Manufacturing, January (expected 47.5, previous 47.2). ISM Paid Price, January (45.2 and earlier)
Revenue: Apple (AAPL), Amazon (AMZN), Deckers Brands (DECK), Honeywell (HON), Meta (META), Merck (MRK), Royal Caribbean Group (RCL), Peloton (PTON), Sirius XM (SIRI), Skechers ( SKX), Tractor Supply (TSCO), The Clorox Company (CLX), United States Steel (X)
Friday
Economic calendar: Number of non-farm employment in January (forecast +175,000, previous +216,000). Unemployment rate for January (expected 3.8%, previously 3.7%). Average hourly wage in January compared to the previous month (expected +0.3%, previous +0.4%). Average hourly wage in January, compared to the same month last year (forecast +4.1%, previous +4.1%). Average weekly working hours in January (expected 34.4, previous 34.3). Labor force participation rate, January (previously 62.5%). University of Michigan sentiment, January finals (78.8 expected, 78.8 pre). Factory orders received in December (expected +0.5%, previous 2.6%). Durable goods orders, fixed value for December (previous rate: 0.0%)
Revenue: Chevron (CVX), Exxon Mobil (XOM), Charter Communications (CHTR)
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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