This week promises to be exciting for the US markets, with several major companies set to release their earnings reports. Among those reporting are Oracle Corp (NYSE: ORCL), Casey’s General Stores, Inc (NASDAQ: CASY), GameStop Corp (NYSE: GME), Broadcom Inc (NASDAQ: AVGO), Adobe Inc (NASDAQ: ADBE), Kroger Co (NYSE: KR), and Jabil Inc (NYSE: JBL).
Investors and analysts alike will be closely monitoring these reports for any indications of financial health and prospects that could influence market sentiment.
In addition to corporate earnings, several key economic events are scheduled that could have a substantial impact on the markets. The US Core Inflation Rate and the overall Inflation Rate for May are set to be released, alongside the Federal Reserve’s (Fed) much-anticipated Interest Rate Decision.
Furthermore, the Federal Open Market Committee (FOMC) will present its Economic Projections. These events will be scrutinized for their potential effects on the current rally in US equities or any signs that might trigger a market pullback.
The prevailing expectation is that the Fed will hold interest rates steady at their current range of 5.25%-5.50%, a level maintained since July 2023. Inflation appears to have hit a barrier, with the headline rate at 3.4% in April, preventing it from reaching the Fed’s target of 2%. Preliminary forecasts indicate that May’s headline inflation will likely remain at 3.4% year-on-year.
Technical analysts note that the S&P 500 (SPX) has downside support near the 50-day moving average. The moving average is a crucial level that often acts as a buffer against significant market drops.
Last week, the Bank of Canada and the European Central Bank (ECB) took the notable step of lowering interest rates by 25 basis points despite their respective inflation rates exceeding 2%. These actions were driven by concerns over economic fragility, highlighting a stark contrast with the more robust US economy. The key question now is whether and when the US might follow suit.
Also on the economic calendar this week is the US Producer Price Index (PPI) for May. The PPI, which reflects the prices that factories charge wholesalers for their products, serves as a crucial indicator of inflationary pressures at the production level. In April, the factory gate prices in the US rose by 0.5% month-on-month, surpassing the forecasted 0.3% increase. The consensus forecast for May suggests a more modest rise of 0.2%, which will be closely watched as an indicator of future consumer inflation trends.
In summary, this week is poised to be a pivotal one for the US markets, with a combination of significant earnings reports and crucial economic data releases. The Fed’s decisions and projections, in particular, will be critical in shaping market expectations and movements in the near term.
Disclaimer: ProsperUs Manager of Content Hailey Chung doesn’t own shares of any mentioned companies.
