Amidst growing concerns about consumer confidence, last week, the Federal Open Market Committee (FOMC) stirred up market turbulence as Fed Chair Powell hinted at the likelihood of one more interest rate hike in 2023 and the need to maintain higher rates for an extended period. This sent the S&P 500 down by nearly 3% for the week, with popular stocks like Tesla (NASDAQ:TSLA) dropping over 10% and Nvidia (NASDAQ:NVDA) down more than 5%.
As we navigate the coming week, there are several noteworthy earnings releases and potential market-moving events on the horizon. Here are five key factors to keep an eye on:
Consumer Confidence
Scheduled for release at 10 a.m. on Tuesday, the Consumer Confidence Index is of particular significance this week. With the Fed’s discussions about maintaining elevated interest rates and signs of fear creeping into the market, a weak confidence reading could further unsettle the markets, potentially triggering additional selling pressure.
New Home Sales
Also set for Tuesday at 10 a.m., New Home Sales data is of interest, especially given the recent news cycle’s focus on housing and interest rates. The past six releases have seen substantial downward revisions, suggesting a potential indicator of forthcoming economic challenges. While it may not have an immediate impact on the market, it can serve as a crucial signal for future economic conditions.
Final GDP
The release of the Final GDP figures for the quarter ending in June holds particular importance, as it is often considered a gauge of whether a recession is imminent. With ongoing discussions about the market and the possibility of a recession, this data could significantly influence market dynamics for the day and the week ahead. The previous GDP releases have exhibited fluctuations, including both negative and positive numbers within the same year. Given the current interest rate environment, a miss might be interpreted as a positive event for the market, while a beat could be seen as negative. Additionally, any revisions to prior quarter GDP figures will offer valuable insights into the economy’s potential trajectory.
Energy
Although not a specific news release, the energy sector has reentered the news cycle as an influential market force. When oil and other fossil fuel prices spike, their impact ripples through various markets. Given the widespread reliance on these resources for production and transportation, cost increases can lead to higher prices for end-user products. As the northern hemisphere approaches winter, heating costs become a concern. Elevated energy prices may exert additional pressure on markets, potentially compounded by reduced consumer spending as income is redirected towards essentials like heating and food. While this may not produce an immediate market effect, it represents a macro-level theme worth monitoring.
Earnings Reports
Earnings reports scheduled for this week could provide insights into consumer spending patterns. On Tuesday, after the market closes, Costco (NYSE:COST) is set to report earnings. Costco’s performance often serves as an indicator of consumer behavior, especially during periods of economic uncertainty. Paying attention to their outlook for the coming year is particularly crucial. On Thursday, two significant releases in the consumer goods sector are anticipated: Nike (NYSE:NKE) and CarMax (NYSE:KMX). These companies’ assessments of the year ahead can offer valuable clues about market and economic conditions. Finally, on Friday, Carnival Cruise (NYSE:CCL) is expected to report. The performance of vacation-related businesses like cruise lines can be indicative of broader economic conditions, as vacations are often one of the first expenditures to be reduced during economic downturns.
As we navigate these events in the coming week, market participants will closely monitor these indicators and earnings reports for insights into the evolving economic landscape and its potential impact on financial markets.
Featured Image: Freepik @ inkdrop
