Things to know this week

news7f02/05/2023

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The recent stock market rally, and whether momentum can sustain through February, will be the main focus of next week as investors continue their analysis through a series of financial results. enterprise.

Wall Street faces a tough economic calendar in the coming days but huge earnings, with companies including Walt Disney (dis), Robin Hood hero (HOOD), Uber (UBER) and Pinterest (pin code) of the top is set to report figures for the fourth quarter.

Although some government data releases are released throughout the first week of February, on the economic front, remarks by Federal Reserve Chairman Jerome Powell will be the highlight of the week. Mr. Powell is scheduled to be interviewed by billionaire Carlyle Group founder David Rubenstein at the Economic Club of Washington, DC on Tuesday.

US stocks fell on Friday after an impressive January jobs report showed payrolls rose by more than half a million last month, reducing the likelihood that the Fed is about to pause its rate hike campaign – a key factor. boosted January’s rally.

U.S. Federal Reserve Chairman Jerome Powell attends a news conference in Washington, DC, U.S., on February 1, 2023. The U.S. Federal Reserve on Wednesday made a rate hike first in the new year. The central bank raised interest rates by a quarter of a percentage point, marking the eighth time the Fed has raised rates since tightening began in March last year. (Photo by Liu Jie/Xinhua via Getty Images) — U.S. Federal Reserve Chairman Jerome Powell attends a news conference in Washington, DC, U.S., on February 1, 2023. (Photo by Liu Jie/Xinhua via Getty Images)

The US economy added 517,000 jobs last month, blowing economists’ expectations for a figure of 188,000, while the unemployment rate fell to 3.4% – its lowest level since 1969.

Despite Friday’s losses, the S&P 500 and Nasdaq Composite closed the week higher, gaining 1.6% and 3.3%, respectively. The Dow failed to post weekly gains, ending the past five trading days with a 0.2% drop.

The stock market has been on a winning streak since early 2023, with optimism fueled by the recent slowdown in the Federal Reserve’s move to smaller rate hikes and job valuations. cut interest rates this year. This year, the S&P 500 is up 7.7% to close on Friday, the Nasdaq 14.7% and the Dow 2.4%.

Many strategists have expressed doubts about the current bullish momentum. Last week at the iConnections Global Alts Conference in Miami, leading Morgan Stanley equity analyst Mike Wilson – a well-known stock market bull – attributed the recent gains to the Effect. January, a market theory implies that stock prices in January rose more than in January. any other month after the year-end sell-off for tax purposes.

On Wednesday, the US central bank raised its benchmark policy rate by 25 basis points, the eighth increase in the current tightening cycle, while also signaling “a continued rise in the target range”. .” Despite that suggestion, markets still welcomed Chairman Powell’s suggestion that signs of “inflation reduction” have appeared in the economy.

“Powell accepts the recent deflation to a greater extent than we expected,” said economists at Bank of America, led by Michael Gapen. “Financial markets received a clear dovish signal from Powell’s press conference, with the S&P 500 up nearly 2.4% since the start of the press conference and 2-year yields down about 14 basis points. .”

Going forward, the key question for the market is whether Powell’s dovishment was intentional or unintentional, the team at BofA said, adding that Powell could be hawkish. more during an appearance at the Economy Club this week. “We think the Fed’s decision to cut inflation is real and it will be difficult for Powell to send a hawkish message after slowing the pace of rate hikes for the second time in as many meetings.”

On the earnings front, profits continued to be below average mid-season. According to FactSet Research, the percentage of S&P 500 companies reporting positive earnings surprises remained flat over the past week, but the magnitude of earnings surprises fell, largely due to disappointing results from recent earnings surprises. large-cap tech giants, according to FactSet Research.

“The result is that the decline in fourth-quarter earnings today is larger than it was at the end of last week and compared with the end of the quarter,” said John Butters, senior earnings analyst at FactSet. “If the index reports a decline in real earnings for the fourth quarter of 2022, it would mark the first annual earnings decline reported by the index since the third quarter of 2020.

Disney CEO Bob Iger speaks during the Bloomberg Global Business Forum in New York City, New York, U.S., September 25, 2019. REUTERS/Shannon Stapleton

Next week, Disney’s results will be the big event on the earnings calendar.

For Disney, this will be the first report since Bob Iger returned as chief executive after former CEO Bob Chapek was ousted.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown notes that pressure is on Iger to prove he has the right ideas to stimulate growth.

“This is especially true in the streaming business, where overspending and concerns about long-term demand are top priorities,” Lund-Yates said in a note. “Consumer spending is moving higher than feared in some areas right now, so we believe Disney+ will do well with more subscribers, especially after a better quarter. Netflix’s expectations, despite tough economic conditions.”

“At theme parks, we expect to hear about positive momentum as China reopens and travel resumes normalization,” Lund-Yates added. “This will be highly profitable.”

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economic calendar

Monday: There are no notable reports scheduled for release.

Tuesday: Balance of tradeDecember ($-68.5 billion expected, $-61.5 billion last month, adjusted to $-90.2 billion); Consumer creditDecember ($25,000 billion expected, $27.962 billion last month)

Wednesday: MBA Mortgage Appthe week ending February 3 (-9.0% in the previous week); Wholesale and trade goodscompared to the previous month, November (0.4% in the previous month); Wholesale inventorymonthly, End of November (1.0% expected, 1.0% last month)

Thursday: Initial Unemployment Claimweek ending February 4 (expected 190,000, last week 183,000); continue to declareweek ending January 28 (1,660 million expected, 1.655 million last week)

Friday: Love of the University of MichiganFebruary Preliminary (65.0 expected, 64.9 ahead); Monthly budget reportJanuary (-42.0 billion USD, -85.0 billion USD)

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Earnings Calendar

Monday: Activate blizzard (ATVI), Chegg (CHGG), Cummins (CMI), transistor ON (ABOVE), Pinterest (pin code), Simon Real Estate Group (SPG), Spirit Airlines (RESCUE), Take-Two Interactive Software (TTWO), Tyson Foods (TSN)

Tuesday: Guarantor (WHO), BP (BP), Chipotle Mexican Grill (CMG), DuPont (RED),Fortinet (FTNT), H&R Block (personnel), global Hertz (HTZ) KKR (KKR), careful (PRU), Royal Caribbean (RCL), VF Joint Stock Company (VFC), Western Union (WU)

Wednesday: Confirm (AFRM), the Bernstein Union (AB), CME Group (CME), coty (COTY), CVS Health (CVS), Dominant energy (D.), Equifax (EFX), Fox Corporation (FOXA), Goodyear tires (GT), Hillenbrand (GREET), Mattel (MAT), MGM Resort (MGM), The New York Times (NYT), Automotive Penske (page), Robinhood Market (HOOD), sonos (SONO), Tenet Healthcare (high school), Uber Technology (UBER), Walt Disney (dis), XPO (XPO), um! Brand (YUM)

Thursday: AbbVie (ABBV), Apollo Global Management (ONE PO), AstraZeneca (AZNL), Brookfield Property Management (BAM MY), canopy growth (CGC), Duke of Energy (DUK), Expedia Group (experience), Hilton (HLT), Kellogg (KY) Lyft (LYFT), News Corp (Northwest Australia), PayPal (PYPL), PepsiCo (PEP), Philip Morris International (AFTERNOON), Ralph Lauren (RL), global S&P (SPKE), Thomson Reuters (TRI), Under armour (UAA), VeriSign (VRSN), Willis Towers Watson (WTW), shout (YELP)