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Stock prices are back near all-time highs, with the S&P 500 index ending Friday at a record high of 4,959. All three major indexes posted gains this week, weathering a tumultuous week of trading.
Stocks initially fell on lackluster tech results from Microsoft (MSFT) and Alphabet (GOOG, GOOGL), but on Wednesday Fed Chairman Jerome Powell said a rate cut in March was not the “base case.” It sold even more.
However, explosive profits from Meta Inc. (META) and Amazon Inc. (AMZN) and better-than-expected January employment data sent stocks into upward mode.
For the week, the S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) rose more than 1%, and the Nasdaq Composite Index (^IXIC) rose just under 1%.
Amid the economic downturn, a number of corporate earnings call for investment in the coming week, including reports from Eli Lilly (LLY), Disney (DIS), Spotify (SPOT), McDonald's (MCD), Chipotle (CMG), and Pepsi (PEP) I'll be welcoming you home. schedule.
Interest rate cut debate continues
At a press conference after the Fed's January meeting, Fed Chairman Jerome Powell poured cold water on investors hoping for a rate cut in March. Powell said the central bank needed “more confidence” in the path to lower inflation before cutting rates.
Economists say January's jobs report, which showed the U.S. economy added 353,000 jobs in the month, supports the Fed's argument that it can wait to cut interest rates without pushing the economy into recession. thinking. However, the report also raised concerns that inflation is accelerating again, as wages rose 4.6% in the month, the highest growth rate since July 2023.
“Following Wednesday's FOMC meeting, we remained confident in our expectations for a March rate cut,” Jefferies US economist Thomas Simmons said in a note to clients on Friday. “But after today's statistics, it's hard to see how that will happen. Unless February's statistics turn around significantly or there is very weak inflation data between now and mid-March. If so, the FOMC is much more likely to maintain policy.'' Policy rates were stable in March. ”
Investors currently see a roughly 20% chance of a rate cut at the March meeting, according to the CME FedWatch tool. On Thursday, the probability was close to 40%, and a month ago the probability was close to 80%.
Earnings check-in
Corporate earnings appeared to have turned a corner towards the end of last week. The S&P 500's quarterly profit fell more than 1%, according to FactSet, but a series of gains over the past week eclipsed the profits of tech giants Apple, Meta, Alphabet, Amazon and Microsoft. and turned over the headlines.
Profits are expected to rise 1.6% in the fourth quarter, according to the latest data from FactSet. And it's worth noting that the forecast for the first quarter is also subdued. Analysts have lowered their first-quarter profit estimates by 1.4% over the past month, which is lower than the five-year average of 2.1% cuts.
According to FactSet, 104 S&P 500 companies are scheduled to report earnings this week.
Mainly quiet on the economic front
There are few data points for investors to analyze over the coming week following an onslaught of economic indicators showing the U.S. economy got off to a strong start in the first quarter. Weekly new jobless claims will continue to be closely tracked as companies announce layoffs, while Monday's update on service sector activity will be closely watched by investors.
weekly calendar
Monday
Earnings: Allegiant (ALGT), Caterpillar (CAT), Chegg (CHGG), Estee Lauder (EL), McDonald's (MCD), Palantir (PLTR), Tyson (TSN)
Economic News: S&P Global US Services PMI, January Final (52.9 expected, 52.9 expected), S&P Global Composite PMI, January final (52.3 expected), January ISM Services Index (52 expected, 50.5 expected)
Tuesday
Revenue: Amgen (AMGN), Chipotle (CMG), Elf Beauty (ELF), Eli Lilly (LLY), Spotify (SPOT), Fiserv (FI), Ford (F), Hertz (HTZ), BP (BP), Snap (SNAP), Toyota (TM)
There is no notable economic news.
Wednesday
Revenue: Alibaba (BABA), Arm Holdings (ARM), CVS (CVS), Mattel (MAT), Paycom (PAYC), PayPal (PYPL), Roblox (RBLX), Uber (UBER), Walt Disney (DIS), Wynn Resort (Wynn)
Economic News: MBA Mortgage Applications, Feb. 2 (down 7.2% year over year), Consumer Credit, December ($16.5 billion expected vs. $23.75 billion a year ago)
Thursday
Revenue: Affirm (AFRM), Aurora Cannabis (ACB), Bill.com (BILL), ConocoPhillips (COP), Expedia (EXPE), Hershey (HSY), Pinterest (PINS), Spirit (SAVE), Take-Two Interactive ( TTWO)
Economic news: Number of new unemployment insurance applications, February 3 (forecast 215,000, previous 224,000), wholesale inventory month-on-month change, finalized value for December (0.4% last year), wholesale sales month-on-month change, December (previous year 0) %)
Friday
Earnings: Canopy Growth (CGC), Pepsi (PEP)
Economic news: Regarding the revision of the consumer price index
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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