Investors will be awaiting the Fed minutes throughout the upcoming holiday-shortened week to see whether there are any fresh details on the path of monetary policy

Fed Minutes

The highlights of the holiday-shortened week's economic schedule are Wednesday's minutes from the Federal Reserve's January meeting.

At their meeting on January 30-31, policymakers did not reduce borrowing costs, and they hinted that a reduction at their next meeting in March is improbable.

More time is required, according to several Fed officials, including Fed Chairman Jerome Powell, to ensure that inflation is returning to the Fed's 2% objective sustainably.

After reducing rate reduction bets in the aftermath of recent positive employment, GDP, and inflation statistics, markets are now pricing in four quarter point rate cuts this year, beginning in June.

Nvidia

Given the size of the company and its position at the epicentre of enthusiasm about the financial potential of AI, Nvidia's earnings report, which is scheduled on Wednesday after the U.S. market close, might be a crucial gauge of market mood.

With its processors becoming the industry standard for artificial intelligence, Nvidia's shares more than quadrupled in 2023 and have risen another 50% so far this year, making it the third largest U.S. firm by market capitalization, after Apple and Microsoft.

The gains made by the S&P 500 this year have been mostly driven by Nvidia.

Positive updates to Nvidia's corporate outlook may prolong the market surge and pique investors' interest in AI, but any disappointment may have far-reaching effects on the markets.

More earnings

Major U.S. retailers are starting their earnings season this week. When Walmart releases its results ahead of the market opening on Tuesday, it is anticipated to set a pessimistic tone for 2024.

According to LSEG projections quoted by Reuters, Walmart is anticipated to report an approximately $11 billion increase in sales for the quarter ending on November 1 and ending on January 31, or up 4%.

Many American households still struggle with inflation due to the high cost of living, and consumer prices increased more than anticipated in January, dashed hopes for an impending interest rate decrease from the Federal Reserve.

Walmart is predicted to post $645 billion in revenues for its fiscal year 2024, more than twice that of its nearest rival, thanks to its dominance in the grocery industry.

According to analysts quoted by Reuters, Walmart should demonstrate increased profitability as a result of decreased supply chain expenses and the decline in petrol prices since November. 8% growth in net income is anticipated.

Walmart's food pricing is drawing in more customers even though grocery prices are still much higher than they were before the outbreak.

PMIs

Due to the robustness of the U.S. economy and its robust labour market, concerns about the possibility of a worldwide recession have decreased.

Additionally, although Germany's economy is predicted to contract this year and China's economy is in a slump, the picture is not entirely dire outside of the United States, according to PMI data released internationally on Thursday.

According to the most recent GDP figures, the eurozone escaped a recession late last year and the January PMI reached six-month highs although in contraction territory. The Ifo business climate index and the German Q4 GDP figures are released on Friday. Notably, the mood among German businesses improved last month.

(Sources: investing.com, reuters.com)