Fresh inflation data could fuel further market volatility in the week ahead
Traders in the NYSE Floor, Jan. 26, 2022.
The Federal Reserve plans to hike interest rates after January’s surprisingly strong jobs report. Now, attention will shift to consumer inflation for the week ahead.
Friday’s report of 467,000 jobs addedWall Street economists were astonished by January’s confusion, some of whom expected a negative numberDue to the effect of the omicron Covid variation on the workforce. Another striking aspect of this report is the other. The report also showed that the payrolls had been revised up by 709,000 job openings in December and November, while wages increased at an impressive 5.7% annually in January.
Art Hogan of National Securities, Chief Market Strategist, stated, “Everyone is back to jumping frog over one another to see how hawkish [they] can get about the Fed’s plans, even though the Fed doesn’t know it.” Traders in the futures market began to priceSix interest rate rises are expected this year. However, economists often predict more than four.
Thursday will see the release of the consumer price index. Friday will see the University of Michigan’s survey on consumer sentiment. The week ahead will also see dozens more earnings, including those for pharmaceutical companies. Pfizer Amgen. Walt Disney reports as do consumer staples like Coca-Cola, PepsiCo Kellogg.
There may be a gradual improvement in inflation readings. Hogan said that if you look at CPI month-over-month, there could be some movement in the right direction. Hogan stated that headline inflation will rise 0.4% from December’s 0.5%. However, this would still represent a 7.2% increase year-over-year.
It would be refreshing to see if inflation moves in the right direction. It might be difficult to get rid of some of that hawkish street tone,” he stated.
Stocks ended Friday with gains despite a steep jump in bond yields. Trades were volatile in recent weeks, with swings large. Meta PlatformsIn one day, the drop was more than 26% earnings disappointmentPlease see the following: PayPalYou can also see it here lost nearly 25% in a single sessionFollowing issuing inadequate guidance. AmazonFollowing its earnings Friday, the stock rose by 13.5%
Julian Emanuel (senior managing director, leader, equity, derivatives & quantitative strategy team, Evercore ISI) stated that this volatility can highlight the risks investors face in tech growth stocks. These top names are the biggest in the world. S&P 500.
It’s difficult for investors, who only know how to make money 15 consecutive years in order to see the world differently. He said that the volatility in earnings of some of these companies isn’t surprising, and it is likely to get worse in an economy expected to grow at 4%.
Emanuel anticipates that value stocks and cyclical securities will outperform growth names in an inflationary climate in which the central banking raises interest rates.
The S&P 500Closed at 4,500 on the last week, 1.5% increase, which is a critical technical threshold. It is the Dowwas up by 1% and the NasdaqThe week’s gain was 2.4% Now, the Nasdaq has fallen 13% from its peak.
With a gain of almost 5% in energy sector, consumer discretionary stocks saw a slight increase of just under 4 percent. Technology was up by about 1%, while financials rose 3.5%.
In the week ahead, markets may remain volatile. This week’s hawkish comments by U.K. and European central banks saw Yields move big. This move was further extended after Friday’s job report.
Emanuel said that they expect volatility to continue, as was shown in stocks during the week. It can also be either to the upside, or to the downside.
The U.S. 10-year yield,This affects mortgages and other loans, rose to 1.93% on Friday.
Wilmington Trust’s chief economist, Luke Tilley, stated that the Federal Reserve won’t be as aggressive in raising interest rates as the market is predicting. He expects that inflation will peak before beginning to fall.
He said, “As we get towards March, April, and May, we’re going get to the point when the base effects bring year-over-year figures down.”
Tilley predicts a March quarter point increase, with three more this year.
Week ahead calendar
3.00 PM. Credit for consumers
Earnings: Pfizer, Chipotle, SoftBank, BP, DuPont, Lyft, Peloton Interactive, Yum China, BNP Paribas, Aramark, Carrier Global, Coty, Thomson Reuters, Masco, S&P Global,Warner Music, Centene and Willis Towers Watson Edgewell Personal Care Sysco Harley-Davidson, KKR, Valvoline, Assurant, Spirit Airlines, Plantronics, Virtu Financial
6:00 a.m. NFIB survey
Earnings: Walt Disney, CVS Health, Mattel, GlaxoSmithKline, Yum Brands, Uber Technologies, MGM Resorts, Fox Corp, Canopy Group, Penske Auto Group, CME Group, Reynolds Consumer Products, Mesa Air, Copa Holdings, Bunge, Lumen Technologies, Molina Healthcare, Zynga, Frontier Group, CDW, Honda, Toyota, Equinor
9:00 a.m. Wholesale Trade
10:30 a.m. Fed Governor Michelle Bowman
12:00 p.m. Cleveland Fed President Loretta Mester
Earnings: Coca-Cola, PepsiCo,Expedia, Credit Suisse AstraZeneca, Twitter, Kellogg, DaVita, Eventbrite, Zillow, Affirm Holdings, GoDaddy, VeriSign,Western Union, Yelp and Terex Mohawk Industries, Equitable Holdings, CyberArk Software, PG&E, Arcelor Mittal, Datadog, Martin Marietta Materials,Duke Energy, Unilever
8:30 a.m. 8.30 a.m. Initial jobless claims
8:30 AM CPI
2:00 p.m. Federal budget
10:00 a.m. Consumer sentiment