Noreen Burke

Investing.com – The U.S. jobs report for January will be a key focus for markets this week as investors try to gauge how aggressively the Federal Reserve may act in its fight against inflation. With tech giants Amazon and Google parent Alphabet reporting, earnings will continue to rise. The Bank of England as well as the European Central Bank will be meeting to discuss the elevated market volatility. Here’s what you need to know to start your week.

1. U.S. jobs report

On Friday, the U.S. will release its January nonfarm payrolls reports. Economists predict that there would be an increase in jobs. This is down from the December 199,000 Omicron report.

The Fed’s ability to tighten monetary policy to fight high inflation could be influenced by signs of strength in the labor force.

After its last policy meeting, the Fed indicated a March rate increase. Chair Jerome Powell admitted that officials could move faster than what markets had already priced in for this fiscal year.

Raphael Bostic, Atlanta Fed president, stated Friday that the central bank can raise rates as high as necessary if economic data warrants it.

According to Friday’s note by its economists, Goldman Sachs predicts that the Fed will raise rates, from just four, and with a first increase expected in March.

2. Earnings

The week will see another large volume of earnings reports. This includes heavyweights like and on Tuesday, and Thursday respectively.

This year, tech stocks are under increasing pressure as investors hesitate to invest in growth stocks at high valuations. However, rising yields have led to investors being more cautious as the Fed tightens its policy to control inflation.

This earnings season, investors are focusing on guidance and how companies plan to address ongoing challenges in global supply.

In recent weeks, uneasy investors punished many companies like Netflix (NASDAQ), JPMorgan Bank (NYSE:), and Tesla (NASDAQ), which delivered subpar results.

Other earnings of note this week include Meta Platforms (NASDAQ:), General Motors (NYSE:), Ford  (NYSE:), Exxon Mobil (NYSE) – Bristol-Myers Squibb, (NYSE), and Merck (NYSE).

3. Get the Dip

Some investors have begun to look at equity valuations in light of the steep fall in U.S. stock prices in January.

After a near 15% decline, the technology-rich have seen their share of 2022’s GDP fall by over 9%.

Many investors have made a profit by buying after pullbacks in the past two years when stocks rose to new records thanks to ample stimulus from the pandemic. Investors are now faced with the reality of five Fed rate increases this year.

The market’s fall hadn’t been precipitous enough for Barclays strategists, who early last week declared in a note it was still “too early to buy the dip.”

On the other hand, the strength of fourth-quarter earnings results, which continue to roll in with S&P 500 earnings season not yet at the halfway point, could bolster the case for investors looking to buy at a discount.

4. Bank of England Rate Increase

To curb inflation which has reached its highest point in 30 years, the BOE will likely raise rates another 0.2% at Thursday’s policy.

The BOE was the first central bank in the world to raise rates after the outbreak of the pandemic. Market watchers are eager to learn what Governor Andrew Baily thinks about future rates.

The expected rate hike will also mean that the bank’s threshold to begin trimming its balance sheet will have been met and this could get underway as soon as March.

5. Eurozone data, ECB meeting

The Eurozone is to release data on fourth quarter and Januaryahead of Thursday’s. It is anticipated that GDP data will show that the economy experienced a slowdown in December and an increase in inflation.

The ECB diverges from the Fed, BOE and BOE with no prospects for a rate rise.

Market watchers don’t expect any changes in monetary policy by the ECB this Week. Instead, Christine Lagarde, the ECB chief is faced with the task of explaining that the policymakers remain hawkish on inflation and are reducing speculation about rate increases.

This was published by Reuters