Earnings, PPI, Housing and Other Key Themes To Watch This Week

The S&P 500 ($SPX) (SPY) closed 2.67% higher on the week with consumer goods and real estate being the two strongest sectors. CPI news on Thursday made for some exciting trading and it was great to have a full week of open markets. 

The Dow Jones Industrials Index ($DOWI) (DIA) was up +2.00% for the week while the Nasdaq 100 Index ($IUXX) (QQQ) was +4.54% higher.

This week we finally started the excitement of earnings reports with some larger banks reporting on Thursday/Friday of last week. Earnings usually have a way to push sectors around and can make for a great buying or selling opportunity. With earnings season starting, the usual news releases due, and yet another holiday in the US, here are 5 things to watch this week in the market:

Earnings

We are officially in earnings season! Banks are leading the way and will more than likely be under some pretty heavy scrutiny with inflation and rates still being the economic indicators in the spotlight. Morgan Stanely (MS), Goldman Sachs (GS), and Citizens Financial (CFG) group report on Tuesday and this could have an effect on the S&P and market as a whole as it displays how well the banks are handling the raising rates. With layoffs in the news lately, it’s possible these are very telling about how the rest of earnings season will go.

Silvergate Capital

Also reporting this week is Silvergate Capital (SI) and this has potential ramifications for the market due to the connection to FTX and other crypto platforms that have not fared well the past few months. Anything crypto-related that trades on the stock market has the potential to be very volatile over the next few months.  While it's possible that this does not have anywhere near the effect on the broad market that the banks will have, it is still worth watching and observing how the crypto markets react to their earnings and vise versa.

MLK Day in the US

Also on deck this week is Martin Luther King day in the US. This means that Monday the markets will be closed in the US. It is possible this ripples out to a quite Tuesday as market makers report back after a long weekend. 

PPI and Retail Sales

PPI has been an important number over the last year, and it’s expected to remain that way until inflation is no longer the talking point for the markets. Producer Price Index is out Thursday at 8:30am EST and has the potential to move the markets regardless of the release. If it's hotter than expected its possible we see a sell as it means the fed could have to pivot to more aggressive hiking again. Softer than expected would me the opposite and could be construed as positive and that the Fed can continue to slow its rate hikes. 

At the same time as PPI, Retail Sales is also released, and this is a general temperature of buying of goods in the US. This has less potential to move the market immediately but is a gauge of longer term sentiment on economic activity in the US. 

Housing Starts/Home Sales

There are two reports on housing this week, the first is Housing starts at 8:30 am on Thursday and the second is Existing home sales at 10:00 am on Friday. Neither have historically been large movers for the market upon release, however they both show broader economic activity. If they are slower than expected it could mean a weakening economy, if they are hotter than expected the opposite could be true. While a softer report would be positive for the Fed and Rate hiking, it is often negative on a larger scale because it means the economy is contracting and that could have some powerful effects in real terms on working-class individuals. 

Best of luck this week and don’t forget to check out my daily options article.

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