Earnings, PMI and Other Key Themes to Watch This Week

Last week was a fairly quiet week for the market, which was slightly unexpected given the amount of potential market-moving news. The S&P 500 ($SPX) (SPY) finished up 0.80% on the week and the majority of it was just a slow grind. 

Tech saw a moderately positive week, with most of the big names like Tesla (TSLA) and Apple (AAPL) up modestly on the week. The big news was the Bank earnings on Thursday evening, JP Morgan (JPM) posted record revenues on higher interest charges and shares rocketed 7% in the after-hours trading. This pulled a lot of the banking sector up with it, a welcome reprieve I am sure following the year the financial sector has had so far. 

This week will be no different, we have plenty of news on tap in addition to some other things to watch. Here are 5 things to watch this week in the markets.

Earnings

It's that time of the quarter again, Earnings Season! And much like Christmas, it can be full of surprises, especially for options traders. This week there are some big names on the docket with Goldman Sachs (GS) reporting Tuesday before the open along with Johnson and Johnson (JNJ) and Lockheed Martin (LMT). 

Thursday has AT&T (T), American Express (AXP), Phillip Morris (PM), and Taiwan Semiconductor (TSM).

Watching banks and other financials could be pretty telling for the rest of the earnings reports, especially in the interest departments. If banks have higher earnings due to increased interest charges, this could be a negative for other reports because they are the people getting charged the interest (along with us in retail land).  Either way with inflation and interest rates higher, this earnings season could produce a lot of tradable events and surprises.

Empire State Manufacturing

Early in the week, we have the Empire State Manufacturing index on Monday at 8:30 am Eastern. Being a forward-looking indicator anything over 0.0 shows the manufacturing conditions are improving, and anything below shows the opposite. It could be worth keeping an eye on this for general market themes with all of the talk about recessions in the media. 

Building Permits

Tuesday at 8:30 am are Building Permits and Housing Starts. These are important to show the appetite the US consumer has for larger purchases as well as the health of the credit markets. Very few people can purchase a house for cash these days so the information in these reports could show how builders and contractors are viewing the overall market conditions coming at them.

PMI’s

A few EU countries as well as the US release manufacturing and services PMI numbers on Friday before the market opens. Manufacturing PMI has been in the contraction territory for a few months now while services has been hovering around the 50 levels across multiple countries. It could be beneficial to watch for both reports to start to trend in the same direction to help create a thesis about future market stability. While there is no crystal ball, it's possible if both services and manufacturing are contracting then economic turbulence could be ahead. Conversely, if both start to trend upwards it's possible the Fed and other central banks have helped to avoid a technical recession. 

Geopolitics

There has been some political posturing as of late surrounding Taiwan and China. Regardless of anyone's position on the topic, the majority of the world's semiconductors come out of Taiwan so any disturbance to that could send ripples through supply chains. Watching for potential reactions surrounding these two countries and further posturing could be beneficial for tactically investing or watching for hedging opportunities. 

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

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