Last week was a wild week in the markets, the S&P 500 ($SPX) (SPY) finished the week about up 2.45%, and despite a spike the previous week, VIX ($VIX) finished the week down 10%. Nvidia (NVDA) was the big move of the week finishing up about 7%. A few banks also reported last week showing mixed results with giants like JP Morgan (JPM) showing a beat and Citigroup (C) showing a miss.
This week earnings season starts to kick off in full as well as a plethora of retail news. Here are 5 things to watch this week in the markets.
Earnings
Earnings are back this week. It starts slowly this week with the financial sector leading the way. Bank Of America (BAC), Goldman Sachs (GS), and American Express (AXP) are some of the larger reports due this week. Keep an eye on anything in your portfolio for earnings, there is not much worse than a surprise position you forget to check for. That said, with financials being a majority of what's due, it’s possible that the higher rates will help their earnings as they can charge more interest on loans.
Empire State Manufacturing
This is a diffusion index of manufacturing across New York, and with the better-than-expected news from last week's inflation data, this could provide some further insight into what the FED may do next. There was a surprise beat last month, and it's been improving month over month for the past few reports. Anything that is better than expected could be seen positively by the markets. This could show the FED that with inflation coming down AND improving manufacturing engines that rate cuts could be back on the table, or at the very least a continued pause.
Retail Sales
Retail sales is due out at 8:30 Eastern Tuesday morning, and this report shows the total value of sales at the retail level. This is a broad look at consumer spending habits over the previous month. If this comes in stronger than expected it could be further proof that we are heading back to a normal economy in the post covid world. It should be noted that this is total value, which when you factor in that prices have been on a steady incline over the past several years it may not be as robust as they think. But a beat would still signal a beneficial change from more recent data.
Building Permits
Housing has been in the news a lot recently, and by the looks of things in the rate market, there could be more of the same. If the building permits number comes out as a beat, it could signal some additional supply is getting ready to enter the market. It would also mean that building and buying of new homes is still positive regardless of the higher interest rates. These are all usually positive signs for the economy and could be seen as positive by the markets.
Existing Home Sales
Similar to the building permits is Existing home sales, this shows the annualized number of homes that were sold in the previous month. Summer is usually the highest volume time for home sales, so if this is a beat it could show that there is some movement coming back into the housing market. A beat could also be considered a positive sign for the economy and the consumer can absorb the higher interest rates easier than originally thought.
Best of luck this week and don’t forget to check out my daily options article.
On the date of publication, Gavin McMaster did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
