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Market Awaits Key Earnings and Economic Data This Week
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We’re a little light on action this morning to start another week of trading, but we’ll have an eventful week by the end of it. That’s good, too, because the middle of next week brings us the latest Federal Open Market Committee (FOMC) meeting, where consensus is for the Fed to raise interest rates another 25 basis points (bps) to a range of 5.00-5.25% — for the first time since 2007.
Beginning tomorrow, we’ll see economic reports on Case-Shiller home prices for February, New Home Sales for March and Consumer Confidence for April — all Tuesday. Beyond this, Durable Goods Orders, Trade Balance and Personal Consumption Expenditures (PCE), all for March. This is in addition to weekly Jobless Claims and the first print on Q1 Gross Domestic Product (GDP) — and, of course, Q1 earnings season continuing.
Of these, the PCE data is by far the most important, in terms of prognosticating on what the Fed will decide about interest rates. Fed Chair Jay Powell routinely cites PCE developments, and this time the report comes out just days before the Fed does. Headline year over year PCE last month reached +5.0%, while on core it was +4.6% — the lowest levels of the cycle on both fronts. That said, we’ll keep a close eye on whether these figures continue to decline meaningfully or whether they’re showing us in a trough, still more than double optimum inflation rates. If this happens, expect the Fed to crank another 25 bps and look toward further hikes.
Coca-Cola (KO - Free Report) reported earnings for its Q1 this morning, beating estimates on both top and bottom lines: earnings of 68 cents per share on sales of $10.96 billion in the quarter outpaced the 65 cents per share and $10.85 billion Zacks consensus. Net income grew more than $30 billion year over year, on both higher demand and raised prices. Organic sales rose +12% year over year. Guidance was in-line with its previous report. In all, a solid quarter. For more on KO’s earnings, click here.
Later this week, we’ll see earnings reports from Microsoft (MSFT - Free Report) , Alphabet (GOOGL - Free Report) , Meta (META - Free Report) , McDonald’s (MCD - Free Report) , Amazon (AMZN - Free Report) and a bevy of others. But perhaps the most important report comes out after today’s close: San Francisco-based regional bank First Republic Bank , which has looked at times over the past month as the next domino determined to fall. So far so good — new deposits were made from the private sector that may keep FRC solvent; today’s Q1 report will give key details. Earnings are expected to be -64% lower than the year-ago quarter, with revenues -19% from Q1 2022.
Pre-market futures have gone back to their neutral/defensive stance, hovering around a zero balance (aside from the blue-chip Dow, which is -34 points at this hour): the S&P 500 is -1 point while the Nasdaq is +2. We were down last week overall, but trading in early hours thus far is on an upward trajectory. Perhaps we can see this flat-to-down trend from the past couple weeks turn around. But realistically, we may need to wait for the FOMC meeting to know for sure where we’re headed.
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Market Awaits Key Earnings and Economic Data This Week
We’re a little light on action this morning to start another week of trading, but we’ll have an eventful week by the end of it. That’s good, too, because the middle of next week brings us the latest Federal Open Market Committee (FOMC) meeting, where consensus is for the Fed to raise interest rates another 25 basis points (bps) to a range of 5.00-5.25% — for the first time since 2007.
Beginning tomorrow, we’ll see economic reports on Case-Shiller home prices for February, New Home Sales for March and Consumer Confidence for April — all Tuesday. Beyond this, Durable Goods Orders, Trade Balance and Personal Consumption Expenditures (PCE), all for March. This is in addition to weekly Jobless Claims and the first print on Q1 Gross Domestic Product (GDP) — and, of course, Q1 earnings season continuing.
Of these, the PCE data is by far the most important, in terms of prognosticating on what the Fed will decide about interest rates. Fed Chair Jay Powell routinely cites PCE developments, and this time the report comes out just days before the Fed does. Headline year over year PCE last month reached +5.0%, while on core it was +4.6% — the lowest levels of the cycle on both fronts. That said, we’ll keep a close eye on whether these figures continue to decline meaningfully or whether they’re showing us in a trough, still more than double optimum inflation rates. If this happens, expect the Fed to crank another 25 bps and look toward further hikes.
Coca-Cola (KO - Free Report) reported earnings for its Q1 this morning, beating estimates on both top and bottom lines: earnings of 68 cents per share on sales of $10.96 billion in the quarter outpaced the 65 cents per share and $10.85 billion Zacks consensus. Net income grew more than $30 billion year over year, on both higher demand and raised prices. Organic sales rose +12% year over year. Guidance was in-line with its previous report. In all, a solid quarter. For more on KO’s earnings, click here.
Later this week, we’ll see earnings reports from Microsoft (MSFT - Free Report) , Alphabet (GOOGL - Free Report) , Meta (META - Free Report) , McDonald’s (MCD - Free Report) , Amazon (AMZN - Free Report) and a bevy of others. But perhaps the most important report comes out after today’s close: San Francisco-based regional bank First Republic Bank , which has looked at times over the past month as the next domino determined to fall. So far so good — new deposits were made from the private sector that may keep FRC solvent; today’s Q1 report will give key details. Earnings are expected to be -64% lower than the year-ago quarter, with revenues -19% from Q1 2022.
Pre-market futures have gone back to their neutral/defensive stance, hovering around a zero balance (aside from the blue-chip Dow, which is -34 points at this hour): the S&P 500 is -1 point while the Nasdaq is +2. We were down last week overall, but trading in early hours thus far is on an upward trajectory. Perhaps we can see this flat-to-down trend from the past couple weeks turn around. But realistically, we may need to wait for the FOMC meeting to know for sure where we’re headed.