Noreen Burkhart

Investing.com — It’s set to be a major week for markets, between the Federal Reserve meeting and an avalanche of big-name earnings. Fed Chair Jerome Powell expects to indicate that the central bank will raise its interest rate in March for the first time since 2018, in an effort to curb rising inflation. Tech giants Microsoft (NASDAQ:), Apple (NASDAQ:) and Tesla (NASDAQ:) are due to report with investors looking to earnings results for reassurance after last week’s selloff, but market volatility looks set to continue for now. Data on fourth-quarter GDP in the United States is available. Economic data for the UK and Eurozone will also be available to show the effect of Omicron. Here’s what you need to know to start your week.

1. Fed will signal March rate increase

After data showed that inflation in the United States rose to an all-time high of nearly forty percent last week, investors are now looking at the Fed to get more information about the direction of interest rates.

Jerome Powell will likely indicate at Fed’s March meeting that it will end its bond buying stimulus program as scheduled and increase interest rates by 25% from their current level of zero.

Markets have already priced in four rate increases this year. Investors will be paying attention to what the Fed has to say about its nearly $9 trillion balance sheet.

Markets expect that the Fed will start to trim the balance sheet during the new year in an effort to increase monetary policy. The minutes of the Fed’s December meeting indicated that officials held lengthy discussions about reducing bond holdings.

Any sign that the balance sheets could shrink more quickly than they did previously could increase Treasuries’ and tech share sales.

2. Earnings deluge

Microsoft, Apple, and Tesla will all report earnings in what promises to be an intense week for investors who are looking to distinguish pandemic successes stories from fundamentally healthy companies.

Netflix, the FAANG darling (NASDAQ:), plunged more than 20% Friday. This was after the Nasdaq forecast that new subscriber growth would be lower than analysts had predicted in the quarter.

Microsoft will report Tuesday’s results and is forecast to record a quarter-end revenue exceeding $50 billion, according to FactSet data.

According to FactSet, Tesla and Apple are likely to report record profits on Wednesday and Thursday.

Other than tech, there are a number of large companies reporting, including 3M and GE. IBM (NYSE:), Intel NASDAQ: Caterpillar (NYSE: American Express (NYSE:). Boeing (NYSE:), Mastercard (NYSE:), Visa (NYSE:), McDonald’s (NYSE:), Johnson & Johnson (NYSE:), and Colgate-Palmolive (NYSE:) are also scheduled to report.

3. Market Turbulence

Markets will remain volatile in the week ahead, with investors focusing on earnings and Fed.

In a continuation of the tech selloff that has pushed the Nasdaq into correction territory, Wall Street’s main indexes closed sharply lower on Friday. The S&P 500 and the tech heavy Nasdaq posted their largest weekly percentage declines since the start of the pandemic in March 2020.

The pandemic was largely beneficial to tech companies, which saw their stock prices soar in the two years since.

However, tech stocks and growth stocks were hard hit by the rapid increase in Treasury yields since 2022. This is due to expectations that the Fed would raise interest rates aggressively to counter high inflation.

High valuation tech companies with high prospects of future profits may be affected by higher interest rates.

4. U.S. economic data

U.S. economists anticipate annualized growth at 5.2%. Recent weeks have seen expectations tempered by rising Omicron virus cases that has impacted economic activity.

In December, the economic calendar includes data about personal incomes and expenses. Given the sharp decline in retail sales, economists predict that personal spending will drop dramatically.

The weekly report also includes information on the initial jobless claims, which rose to a record three-month high last Wednesday.

Some economists fear that the Fed’s March rate hikes could be halted by the rise in jobless claims, combined with the dramatic drop in retail sales.

5. Eurozone, U.K. data

The Eurozone’s largest economy Germany is to release fourth quarter GDP data on Friday, along with France and Spain. These figures will be used to show the effect of Omicron on economic recovery. The next week, GDP data for the bloc is expected.

On Monday, the Eurozone will release PMI numbers. These figures will reflect how economic activity performed this month.

PMI data will be released by the U.K. on Monday. Service sector activity saw a decline in December, but other data shows that this has been reversing. Expect the data to show an increase in December, and at this point, it appears that the Bank of England will still be raising rates in February.

This report was contributed by Reuters