Independence Day, Fed Minutes and Other Key Things to Watch This Week

It was an interesting week last week in the markets. There seemed to be rotations on a near daily basis alternating between tech and safety such as energy and industrials. Even with the whipsawing news, it turned out to be a fantastic trading week, the S&P 500 ($SPX) (SPY) finished up over 2%. Energy also had a great week with XOM (XOM) finishing up nearly 5%.

The markets moved also by some conflicting news. US final GDP came out with a beat above expectations, and not long after, home sales came out with a miss. This week looks primed to be an even more interesting week. With an extended holiday in the US as well as a few potentially high-impact news releases, things could get interesting. Without further ado, here are 5 themes to watch this week in the market.

Bank Holiday

This Tuesday is Independence Day in the US so markets will be closed in celebration of that. This leaves Monday open, but with it being one of the largest travel holidays in the US and the unofficial kickoff of vacation season, its possible volume will be off all week. This could be especially true on Monday though. 

ISM Manufacturing PMI

Monday morning at 10 am Eastern the ISM Manufacturing PMI comes out, which is an index of manufacturing purchasing. Anything under 50 is considered to be indicative of a contraction in manufacturing, and this has been under 50 in all of the last 6 reports.  If this continues to indicate a contraction, it could weigh on the market. This would also contradict the GDP reading from last week which was a beat. However this report comes out, it's plausible to expect some volatility given that it's also the day before a bank holiday, and volume will likely be at least slightly muted.

OPEC Meetings

OPEC meetings will more than likely have an outsized effect on the oil market and energy stocks. XOM and COP are two fairly liquid equities if trading that is in your plan. Outside of the immediate potential volatility, petroleum is a fixed input in almost everything. From raw materials to the transportation to the stores and homes after purchase, how the price of oil goes often impacts the prices of goods. It could be worth keeping an eye on this meeting to see if it's a cut to production and by how much.

Fed Meeting Minutes

The meeting minutes are released on Wednesday at 2 pm Eastern. This explains in greater detail the thinking behind the most recent rate pause. These are often read and digested to see what the Fed is thinking for future plans, although Powell has already more or less said that hikes will continue and the market looks to be pricing that in.

NFP

Friday, before the market opens, is the non-farm payrolls. This is the change in payrolls for the previous month's net of farming jobs. With GDP coming in strong last week, it will be interesting to see if NFP is a beat or a miss, and by how much. Usually in order to see a strong economy, you would want both pieces of news to trend together. Either way, since this is before the market opens it will be tough to trade outside of the futures markets. On a more macro time horizon though, these numbers are often important to look at and see how they are trending. 

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

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