More Earnings Reports, The Fed And Other Key Themes To Watch This Week

The broader market finished last week up over 2% with some tech names leading that charge. Tesla (TSLA) came to mind with a breathtaking 30% rally last week. That stock is up over 60% in the last month, truly an amazing rally after the beatdown it took at the end of last year. We are at peak earnings seasons so that is having a large market impact as well.

The S&P 500 ($SPX) (SPY) was 2.57% higher for the week while the Dow Jones Industrials Index ($DOWI) (DIA) was up +1.81% and the Nasdaq 100 Index ($IUXX) (QQQ) was +4.71% higher.

Last week was mixed in terms of news releases, but the major inflationary data did not seem to affect the market in any apparent negative way.  PMI came in a little hotter than anticipated, but other macro news like advanced GDP and home sales also came in better than expected. With January almost behind us: here are 5 things to watch this week.

Earnings

Earnings are still an important part of the market, especially if you trade individual stocks. Big names like Exxon Mobil (XOM), Pfizer (PFE), and United Parcel Service (UPS) report this Tuesday but that is far from the only big hitters this week. Being in the peak of earnings season it will be important to keep an eye on who is reporting so that you are not caught in a position with numbers due out. 

Buyback Blackout

This is more myth than fact, but supposedly buybacks are halted before earnings season and resume a few days after a company releases its numbers. Much like the Santa Claus Rally, there may not be much to this, but with a lot of large companies already reporting it is possible that we see some additional liquidity in the market, especially with a lot of these companies talking about share buybacks from the previous year in their earnings calls.

Consumer Confidence 

This could be an essential release to watch, with the powers that be saying how strong the economies of their respective countries are, they are singing a vastly different tune than the average consumer. It could be telling if confidence is lower than expected with all of the layoffs hitting tech and consumer goods. It's possible this will move the market in the new year as a lot of people are talking about recession and job loss. 

ISM Manufacturing PMI/Services PMI

Manufacturing PMI is due Wednesday at 10 am Eastern, and Services PMI is due Friday at 10 am Eastern. While these are technically two separate reports, they both are a measure of inflation on the production end of the spectrum. If these come in hotter than expected, it could show that inflation is still creeping into production costs in a meaningful way. If the PMIs come in lower, then the opposite could be true. These numbers will also be important because we have a Fed meeting this week.

Fed Funds/Fed Conference 

Wednesday at 2 pm eastern the Fed Funds rate is announced. It appears that the market is anticipating a 25 basis point increase to 4.75%. If it comes in at 5% or higher it is possible that it really moves the market in a negative direction. That would be short-term proof that the Fed still thinks it needs to be aggressive with rates to continue to combat inflation. In addition to the Rate decision is the FOMC presser that follows at 2:30 pm eastern time. Usually, the market watches for the type of language that is used to try and tease out the future thought process of the Fed Board. I would expect this to be no different, so it is possible that both the rate decision and the press conference produce some very tradable moves in the market! 

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

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