The past week saw a relatively calm performance in the S&P 500, trading within a range of 4,546 to 4,609. The overall index showed a modest gain of +0.21% for the week. Notably, Mongodb (NASDAQ:MDB) experienced a significant decline on Wednesday, despite reporting increased revenue. Meanwhile, Alphabet (NASDAQ:GOOGL) witnessed a surge in its shares on Thursday, attributed to positive reactions from traders regarding the launch of their Gemini artificial intelligence model.
Looking ahead, this week will pivot around interest rates, with crucial Consumer Price Index (CPI) data and the Federal Open Market Committee (FOMC) rate decision on the horizon. Here are five key factors to monitor in the market this week:
10-Year Note Auction
The 10-year note auction, scheduled for 1 pm on Monday, could impact equity markets. Analysts, including Alex McGrath of NorthEnd Private Wealth, suggest that the market may have prematurely anticipated rate cuts in early 2024. The yield from November was 4.519%, and the upcoming auction will reveal this month’s yield.
CPI Data
The CPI data, set to be released before the market opens on Tuesday, holds significance for the Fed’s rate decision on Wednesday. Despite a 1.2% decline in labor costs in the third quarter, the market is keen to see if CPI drops below 3% from last month’s 3.2%, aligning with the Fed’s target rate of 2-3%.
FOMC Statement and Rates Decision
Thursday at 2 pm will see the FOMC statement and rates decision. Market expectations lean towards the Fed maintaining current rates. Fed Chair Jerome Powell, while not committing to rate cuts, faces a market anticipating a 90% chance of cuts by May 2024, with a 60% chance in March. Powell’s statements will be closely monitored.
Earnings
Adobe (NASDAQ:ADBE) and Costco (NYSE:COST) are among the notable companies reporting earnings this week, with Adobe scheduled for Wednesday and Costco for Thursday.
Initial Jobless Claims
Thursday morning will bring the release of initial jobless claims before the market opens. Investors, amidst mixed data releases, will focus on signs of cooling in the job market. A stronger-than-expected job market may impact perceptions of future rate cuts and exert pressure on equity markets.
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