- Investors are preparing for mega-cap earnings, economic data, and the Federal Reserve’s monetary policy meeting.
- Powell and other policymakers have cautioned against expecting rate cuts until inflation cools to the 2% target.
- Recent robust economic data, especially last week’s strong GDP and personal consumption expenditures, have eased US recession fears.
On Monday, US equities surged as investors anticipated a week packed with mega-cap earnings, economic data, and the Fed’s monetary policy meeting. All three major US stock indexes moved higher. The Nasdaq, focused on tech stocks, led with the most significant percentage gain. Meanwhile, the S&P 500 set another record closing high.
Ryan Detrick, Chief Market Strategist at Carson Group in Omaha, commented, “Today marks the calm before the storm.” Additionally, he highlighted the week’s importance, driven by earnings, the Fed, the jobs report, and ongoing geopolitical uncertainties.
Tech quarterly sales (Source: Bloomberg)
High-profile tech earnings this week will start with Alphabet and Microsoft on Tuesday, followed by Qualcomm. The week ends with Apple, Amazon.com, and Meta Platforms. Forecasts show that most tech giants will report record quarterly sales except Apple.
Meanwhile, the Federal Open Markets Committee will end its policy meeting on Wednesday. The Fed will likely maintain the key Fed funds target rate at 5.25% to 5.50%.
Detrick noted, “Powell is likely to be cautious,” emphasizing the Fed’s determination to lower inflation and reluctance to confirm an expected rate cut in March. Powell and other policymakers have cautioned against expecting rate cuts until inflation cools to the 2% annual target.
This week’s economic reports will cover the labor market, with the Job vacancies report, ADP, fourth-quarter employment costs, productivity, and planned layoffs. Additionally, the January employment report will come out on Friday. Other reports include Case-Shiller home prices, consumer confidence, the Institute for Supply Management’s purchasing managers’ index, construction spending, and factory orders.
Recent robust economic data, especially last week’s strong GDP and personal consumption expenditures, have eased recession fears. They have also dampened expectations of a Fed rate cut in March.
On individual stocks, Tesla rose 4.2%, while iRobot dropped 8.8% after abandoning merger plans with Amazon. Meta Platforms rose 1.7% after Jefferies raised its target price to $455. Meanwhile, Warner Bros Discovery lost 1.2% as Wells Fargo demoted the stock to “equal weight” from “overweight.” SoFi Technologies rose 20.2% after posting a fourth-quarter profit.
