Noreen Burkhart

Investing.com — This week, investors will focus on retail sales data and earnings as well as comments from Federal Reserve officers, such as Chair Jerome Powell. These are all key indicators of the direction of interest rates in the near future. Friday’s end of week bounce in equity markets came amid hopes markets are near the bottom after a brutal slide, but the tumble may still have more room to run. Investors in crypto will be closely watching the consequences of a huge price drop. The U.K.’s April inflation data should show that prices have risen above 9%. Here’s what you need to know to start your week.

1. U.S. economic data

Investors will closely examine economic data as they try to determine whether an aggressive Fed tightening to stem soaring inflation will lead to a soft or hard landing.

Tuesday’s retail sales figures for April are expected to show solid gains thanks to steady auto sales. Economists predict a 0.7% rise after 0.5% inflation in March.

Also, the U.S. will release data from regional manufacturing activities and reports about housing sales. Rising mortgage rates are expected to cause a cooling in housing data.

Jerome Powell, Fed Chair will be speaking on Tuesday. Powell expects to reiterate the fact that the U.S. central banking will increase rates by half of a percentage point at its two next meetings.

The Fed also featured John Williams from New York, James Bullard of St. Louis, Patrick Harker of Philadelphia, Charles Evans, President Chicago Fed. 

2. Earnings from retail

Investors will also be watching a series of earnings reports from retail stores during this week to see if there are any signs that the cost of living is affecting consumers’ spending power.

Before the markets open Tuesday, Walmart (NYSE) and Home Deport, the largest U.S. retailer will report their fiscal first quarter earnings. Target (NYSE:) Lowes and Lowes will report before the open Wednesday. Macys follows on Thursday.

Investors will be looking particularly closely at retailers’ guidance for the second half of this year amid elevated inflation, higher wage and fuel costs and ongoing supply chain disruptions.

3. Market bottom?

Wall Street finished higher Friday following another volatile week. Markets were jittery as investors hoped that inflation would soon peak. But, fears of an aggressive Fed policy that could cause a recession weighed down by hopes that the Fed might not be too strict in its tightening.

Despite Friday’s gains, the and the Nasdaq posted their sixth straight weekly loss, while the Dow recorded its seventh consecutive weekly decline.

Investors seek out clear indicators of a bottom in the market, as they fear that sharp declines in equity prices may continue.

“I don’t think we are out of the woods yet on a near-term basis,” Mark Hackett, chief of investment research at Nationwide told Reuters. However, investors’ expectations are now reset drastically.

Willie Delwiche is an investment strategist from market research company All Star Charts. He told Reuters that he doesn’t look for indicators of a bottom and instead focuses on signs that stocks could mount a sustained rally.

“Too many people right now are trying to pick a bottom and that’s proving to be futile and expensive,” Delwiche said. “This is a risk-off environment … Moving to the sidelines, letting the volatility play out, makes a lot of sense for investors.”

4. Crypto crash

After a volatile week that saw the value of TerraUSD fall to $1, investors will closely monitor crypto assets over the coming week.

Stablecoins can be used as a medium to convert balances into fiat cash, or to transfer money between cryptocurrency and traditional assets.

Fitch, a rating agency for digital finance and cryptocurrency said that investors could lose faith in stablecoins if they don’t trust them. This is because many financial institutions have been increasing their exposure to this sector over the past few months.

While concerns about rising inflation have led to a broad-based sale of risk assets, crypto assets were taken up. However, wider financial markets have not seen any knock-on effects from the crash.

Fitch claimed that the weakening of financial regulatory markets’ links will reduce volatility in crypto-markets and prevent it from causing wider financial instability.

5. UK inflation surge

UK inflation data will be released on Wednesday. They are expected to reveal that consumer prices shot up to 9.1% in April on a year over year basis. This is the biggest jump in annual inflation rates since 1980, and also the fastest since 1982.

When it raised its interest rates this month, the Bank of England stated that it expected inflation to increase above 10% by the end of the fourth quarter.

UK Jobs data collected a day early is expected to show tightness in labor markets, which will add to wage pressures and increase price pressures.

Christine Lagarde (President of European Central Bank) will be speaking in Eurozone. On Tuesday, the ECB will publish the minutes from its most recent meeting.

This was contributed by Reuters