The Fed, Earnings and Other Key Things to Watch This Week

Last week was a very exciting week in the markets with Netflix (NFLX) earnings topping the news. Netflix came out with pretty mixed results but subscriber growth was a huge contributing factor to the stock price finishing the week up over 18%.  Additionally, Intel (INTC) came out with cautious guidance that pushed the stock down in after-hours trading closing the week off over 9%.

Even with all the conflicting reports under the hood, the S&P 500 ($SPX) (SPY) still finished the week up over 1% cracking new all-time highs several times last week. This week we have big news from the Fed coming on Wednesday in addition to several other high-powered earnings releases.

Here are 5 things to watch this week in the Market.

Earnings

Earnings are now in full swing again and this week there are several high-profile names out Tuesday. On the Tech side of things Google (GOOGL), Microsoft (MSFT), and Advanced Micro Devices (AMD) are all out after the close. Tech so far has had mixed results and these names are large enough to move the market. Potentially more important than the numbers will be the guidance and any potential layoffs. These could negatively impact market action the following day. In addition to tech, there is also Pfizer (PFE), United Parcel Service (UPS), and Starbucks (SBUX) reporting on Tuesday.   

Thursday is also a big day on the earnings front with the behemoths Apple (AAPL), Amazon (AMZN), and Meta Platforms (META) reporting after the close. Given the number of funds and investors that hold these names, especially Apple, any adverse action after the report could have a potential cascade effect the next day as funds need to rebalance their positions. 

JOLTs

Job Openings are out Tuesday at 10 am and this could cause some short-term volatility in the market given that employment and the economy seem to be remaining strong in reports even as layoffs are being reported by many companies. This type of conflicting data could cause some movement in the market and larger players attempt to figure out how to best position for the short-term future. In this case, it's possible that an increase in job openings is seen as a positive and that a decrease in openings could be seen as a negative.

The Fed

Both the Fed Funds Rate announcement and the press conference that follows usually produce a lot of volatility, especially recently with such an emphasis put on rates. While a hold at 5.50% is expected, any deviation from this could cause some selling pressure in the market, and it may not matter which direction. If there is a surprise hike, it means that inflation is still too strong under the hood and if there is a surprise cut it could mean the economy is not as strong as we are being told. Either way, it's possible the market does not read either scenario as a positive.

ISM Manufacturing PMI

The manufacturing sector has been contracting over the past several months based on this report, and if it continues to contract this month with a release under 50 the market could view this as a positive. If the economy is weakening then it could urge the Fed to cut rates on a quicker timeline than they have previously announced. This could be a positive for equities as lower rates usually mean higher prices.

Non-Farm Payrolls

Out Friday morning is the Non-Farm Payrolls report which measures the number of new employment that is outside of the farming industry for the prior month. What would be important to watch, outside of the top line number, is how they revise the previous month. Almost all of the previous 6 releases have been revised down showing worse than reported growth in jobs. With January being such a large surprise beat, watching what they revise it to could be a good indication of what's to come in the economy. 

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

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