Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Top 5 Things to Watch in Markets in the Week Ahead

Economy Jul 31, 2022 22:30
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters
 
YUM
+0.83%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
HOOD
-0.55%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
ABNB
+0.86%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
UBER
-0.03%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
MRNA
-0.04%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
PYPL
+1.12%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Noreen Burke

Investing.com -- After data on Thursday showing that the U.S. economy is on the cusp of a recession this Friday’s monthly employment report will be even more highly anticipated than usual. The report is expected to show that the labor market remains robust, despite reports that some companies are cutting jobs and freezing hiring. Investors will also continue to digest a slew of earnings results with dozens of companies set to report in the coming week. Several Fed officials are set to speak, and their comments will also be closely watched. Meanwhile, the Bank of England is expected to accelerate the pace of rate hikes as it steps up efforts to curb inflation. Here’s what you need to know to start your week.

  1. Nonfarm payrolls

Friday’s nonfarm payrolls report for July will show whether the recent barrage of Fed rate hikes have impacted the labor market.

Analysts expect the economy to have added 250,000 jobs in July, moderating from June’s pace of 372,000, while the unemployment rate is expected to hold steady at a historic low of 3.6%.

 A smaller than expected number could bolster the view that the Fed may not be as aggressive as expected when it comes to interest rate hikes after Fed Chair Jerome Powell said last week that the central bank’s September rate decision will be data dependent.

The Fed hiked rates by 0.75% on Wednesday, the second hike in a row of that size.

After data last Thursday showed the U.S. economy contracted in the second quarter, equity markets were boosted by bets that interest rates would rise more slowly.

  1. Fedspeak

Investors will get a chance to hear from several Fed officials this week, including Chicago Fed President Charles Evans, St. Louis Fed President James Bullard and Cleveland Fed President Loretta Mester. Their comments will be watched for any indications that a smaller rate hike may be on the cards in September after recent data pointing to economic weakness.

Given mounting fears over the prospect of a recession, market watchers will also be paying particular attention to the Institute of Supply Management’s manufacturing PMI on Monday, and the ISM services PMI on Wednesday, which are both expected to confirm that the economy is slowing.

The U.S. is also to release data on JOLTS job openings on Tuesday. While job openings have been easing in recent months they are expected to remain at elevated levels.

  1. Earnings deluge

Some better-than-expected earnings reports helped boost stocks last week and the deluge of earnings results is set to continue in the coming week with a broad range of companies, including Activision Blizzard (NASDAQ:ATVI), Caterpillar (NYSE:CAT), Uber (NYSE:UBER) and Eli Lilly (NYSE:LLY) reporting.

Positive forecasts from Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) on Friday showed resilience in giant companies to survive an economic downturn.

Second-quarter U.S. corporate results have mostly been stronger than expected. Of the 279 S&P 500 companies that have reported earnings so far, 77.8% have exceeded expectations according to Reuters data.

Other companies reporting during the week include Loews (NYSE:L), Dupont De Nemours (NYSE:DD), Starbucks (NASDAQ:SBUX), Airbnb Inc (NASDAQ:ABNB), Advanced Micro Devices (NASDAQ:AMD), PayPal (NASDAQ:PYPL), Booking Holdings (NASDAQ:BKNG), eBay (NASDAQ:EBAY), CVS Health (NYSE:CVS), Moderna (NASDAQ:MRNA), Under Armour (NYSE:UAA), AMC Entertainment (NYSE:AMC), Yum! Brands Inc (NYSE:YUM), Robinhood (NASDAQ:HOOD) and Restaurant Brands (NYSE:QSR).

  1. Stocks rally

U.S. stocks added to their recent rally on Friday, with all three major indexes gaining for the month and for the week.

The S&P 500 gained about 9.1% for July in its biggest monthly percentage gain since November 2020, while the Nasdaq jumped about 12.3% in July in its biggest monthly gain since April 2020.

Stocks were boosted by mainly upbeat earnings reports, along with investor speculation that the Fed may not need to be as aggressive with interest rate hikes as some had feared.

Despite the positive end to the month for stocks, Mark Haefele, chief investment officer at UBS Global Wealth Management, told Reuters investors should proceed with caution, noting: "In the near term, we think the risk-reward for broad equity indexes will be muted. Equities are pricing in a 'soft landing,' yet the risk of a deeper 'slump' in economic activity is elevated."

  1. Bank of England to accelerate rate hikes

The Bank of England is widely expected to hike rates by half a percentage point at its meeting on Thursday, which would be its largest hike since 1995.

Only three BoE officials voted in favor of a 0.5% rate hike at the bank’s last two meetings, but data since then has shown inflation hitting a four-decade high of 9.4%. It could hit 12% by October - six times the BoE target.

Governor Andrew Bailey has pledged to act forcefully if needed to get inflation down.

Elsewhere, the Reserve Bank of Australia is expected to hike rates by 0.5% at its upcoming meeting on Tuesday with inflation Down Under running at 6.1%, more than double the RBA’s 2-3% target.

--Reuters contributed to this report

Top 5 Things to Watch in Markets in the Week Ahead
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email