Rally in focus, Powell speaks, more earnings pour in: 2/06/2023 - 2/10/2023
Federal Reserve Chair Jerome Powell is scheduled to speak at the Economic Club of Washington, D.C. on Tuesday.
Markets
Dow Jones: 33,926.01 (-0.38%) 📉
S&P 500: 4,136.48 (-1.04%) 📉
Nasdaq: 12,006.96 (-1.59%) 📉
*Stock numbers as of market close on February 3rd
The recent stock market rally and whether momentum can hold up into February will be the main focus of the week ahead while investors continue to parse through a torrent of corporate financial results.
Wall Street faces a lean economic calendar in the coming days but a hefty docket of earnings, with companies including Walt Disney DIS 0.00%↑, Robinhood HOOD 0.00%↑, Uber UBER 0.00%↑, and Pinterest PINS 0.00%↑ among headliners set to report figures for the fourth quarter.
While few government data releases are on tap in this first full week of February, on the economic front, remarks by Federal Reserve Chair Jerome Powell will be a highlight of the week. Powell is scheduled to be interviewed by billionaire Carlyle Group founder David Rubenstein at the Economic Club of Washington, D.C., on Tuesday.
U.S. stocks dropped Friday after a stunning January jobs report showed payrolls grew by more than half a million last month, dampening prospects for an imminent pause by the Fed on its rate-hiking campaign — a key factor propelling January's rally.
The U.S. economy added 517,000 jobs last month, blowing out economist expectations for a reading of 188,000, while the unemployment rate fell to 3.4% — the lowest since 1969.
Despite Friday's losses, the S&P 500 and Nasdaq Composite closed the week higher, advancing 1.6% and 3.3%, respectively. The Dow failed to eke out a weekly gain, ending the past five trading days down 0.2%.
Equity markets have been on a winning streak to start 2023, with optimism fueled by a recent slowdown in the Federal Reserve's downshift to smaller rate hikes and markets pricing in rate cuts this year. For the year, the S&P 500 is up 7.7% as of Friday's close, the Nasdaq 14.7%, and the Dow 2.4%.
Many strategists have expressed doubts about the current rally. Last week at the iConnections Global Alts Conference in Miami, Morgan Stanley's top equity analyst Mike Wilson — a prominent stock market bear — attributed recent gains to the January Effect, a market theory that implies securities' prices increase in the month of January more than in any other month after a year-end sell-off for tax purposes.
On Wednesday, the U.S. central bank lifted its benchmark policy rate by another 25 basis points, its eighth hike of the current tightening cycle, while signaling "ongoing increases in the target range." Despite that hint, markets cheered a suggestion by Chair Powell that signs of "disinflation" were present in the economy.
On the earnings side, profits continue to be subpar into the season's midpoint. The share of S&P 500 companies reporting positive earnings surprises remained flat over the past week, but the magnitude of upside earnings surprises decreased, largely driven by disappointing results from mega-cap technology giants, according to FactSet Research.
In the coming week, Disney results will be the big event of the earnings calendar.
For Disney, it will be the first time reporting since the return of Bob Iger as chief executive after former CEO Bob Chapek was ousted.
Monday, February 6
Activision Blizzard ATVI 0.00%↑, Simon Property Group SPG 0.00%↑, Cummins Inc. CMI 0.00%↑, ON Semiconductor Corp. ON 0.00%↑, Tyson Foods TSN 0.00%↑, Take-Two Interactive Software Inc. TTWO 0.00%↑, and Pinterest PINS 0.00%↑
Tuesday, February 7
Trade Balance, December (-$68.5 billion expected, -$61.5 billion during the prior month, revised to -$90.2 billion)
Consumer Credit, December ($25.000 billion expected, $27.962 billion during the prior month)
Linde LIN 0.00%↑, BP BP 0.00%↑, Vertex Pharmaceuticals VRTX 0.00%↑, Fiserv Inc. FISV 0.00%↑, KKR & Co. KKR 0.00%↑, Chipotle Mexican Grill CMG 0.00%↑, Fortinet FTNT 0.00%↑, Prudential Financial PRU 0.00%↑, DuPont DD 0.00%↑, Illumina Inc. ILMN 0.00%↑, and Enphase Energy ENPH 0.00%↑
Wednesday, February 8
MBA Mortgage Applications, the week ended Feb. 3 (-9.0% during the prior week)
Wholesale Trade Sales, month-over-month, November (0.4% during the prior month)
Wholesale Inventories, month-over-month, November Final (1.0% expected, 1.0% during previous month)
Toyota Motor Company TM 0.00%↑, The Walt Disney Company DIS 0.00%↑, CVS Health Corp. CVS 0.00%↑, Equinor EQNR 0.00%↑, Eaton Corporation ETN 0.00%↑, CME Group CME 0.00%↑, Uber Technologies UBER 0.00%↑, Dominion Energy D 0.00%↑, Emerson Electric Co. EMR 0.00%↑, O’Reilly Automotive ORLY 0.00%↑, Yum! Brands Inc. YUM 0.00%↑, Equifax EFX 0.00%↑, and Robinhood Markets HOOD 0.00%↑
Thursday, February 9
Initial jobless claims, the week ended Feb. 4 (190,000 expected, 183,000 during the prior week)
Continuing claims, the week ended Jan. 28 (1.660 million expected, 1.655 million during the prior week)
AbbVie ABBV 0.00%↑, PepsiCo. PEP 0.00%↑, Philip Morris International PM 0.00%↑, TotalEnergies TTE 0.00%↑, Unilever UL 0.00%↑, S&P Global Inc. SPGI 0.00%↑, PayPal Holdings PYPL 0.00%↑, Duke Energy Corp. DUK 0.00%↑, and Thomson Reuters Corp. TRI 0.00%↑
Friday, February 10
University of Michigan Sentiment, February Preliminary (65.0 expected, 64.9 prior reading)
Monthly Budget Statement, January (-$42.0 billion, -$85.0 billion)
Enbridge Inc. ENB 0.00%↑, IQVIA Holdings Inc. IQV 0.00%↑, and Honda Motor Company HMC 0.00%↑
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