Last week saw the market experiencing sharp swings, with a notable dip mid-week followed by a partial recovery spurred by a positive jobs report towards the end. Despite this volatility, the S&P 500 closed the week nearly 1% lower.
Tesla (NASDAQ:TSLA) grabbed attention on Friday when Reuters reported a revision in their plans for low-cost electric vehicles, causing the stock to plummet by over 5%. However, a swift response from Elon Musk on Twitter led to a brief rebound. Nonetheless, Tesla concluded the week with a decline of over 6%.
Looking ahead, this week promises a somewhat quieter news cycle, but there are key events slated for the latter part of the week that investors should monitor closely.
Here are five key events in the market for the upcoming week:
Crude Oil Prices
Crude oil has witnessed a surge in recent weeks, crossing the $85/barrel mark for the first time since last year. The implications of high oil prices are significant, particularly in terms of pricing and inflation dynamics. With the Federal Reserve already scaling back rate cut expectations in recent weeks, sustained high oil prices could further solidify the likelihood of no rate cuts this year.
Moreover, elevated oil prices can exert pressure on consumers, leading to increased spending on heating and transportation and potentially dampening overall consumer spending.
30-Year Bond Auction
Thursday’s 1 pm auction of 30-year bonds is pivotal as it reflects investor sentiment towards risk. A heavily subscribed auction may signal investor confidence in current risk-return dynamics. Conversely, a tepid response could indicate growing investor apprehension, potentially impacting the Fed’s future rate decisions. Weak demand at bond auctions might prompt the Fed to reassess its stance on rate cuts.
CPI (Consumer Price Index)
Given the recent rhetoric from Fed speakers, the CPI release this week holds the potential to significantly influence the market. A higher-than-expected CPI figure could trigger a sell-off as market expectations of rate cuts diminish, while a weaker-than-anticipated CPI might buoy market sentiment with hopes of maintaining current rate levels or even potential cuts.
FOMC Meeting Minutes
Wednesday’s release of the Federal Open Market Committee (FOMC) meeting minutes provides insights into the rationale behind the latest rate decision. Although the decision itself and Chairman Jerome Powell’s sentiments are already known, the minutes often introduce short-term volatility as traders analyze additional information from the meeting. Key points include voting patterns, factors influencing Fed decisions, and signals for future policy adjustments.
PPI (Producer Price Index)
Thursday’s release of the Producer Price Index (PPI) offers a counterpart to CPI, focusing on the cost of raw materials. While the Fed primarily considers the Personal Consumption Expenditures (PCE) index for inflation assessment, significant spikes in both PPI and CPI could influence Fed policy decisions and impact consumers through rising prices. Observing PPI trends can provide insights into downstream price increases, as producers often pass on cost hikes to consumers to maintain profitability.
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