Stock Market - The Week Ahead

Stocks

The S&P 500 increased 2.3% last week, marking the biggest weekly percentage rise since mid-December. The Nasdaq increased 2.9%, marking the largest weekly percentage rise since mid-January, while the Dow Jones up 2%, marking also the largest weekly gain since mid-December.

After a run in which the S&P 500 has risen 27% since late October, some market observers think the market is ready for a retreat.

On the other hand, other analysts predict that the trend will persist as long as investors look past the technology and rapidly growing companies that have driven the gains in the U.S. stock market in the last year.

As fund managers make portfolio adjustments, volatility may also arise at the conclusion of the first quarter.

Fed Speeches

Among the Fed officials scheduled to speak this coming week are Fed Chair Jerome Powell, Fed Governors Lisa Cook and Christopher Waller, and President Raphael Bostic of the Atlanta Fed.

The increase in the overnight index swap market pricing in an 85% likelihood of four cuts in 2024 was noted by Macquarie. "Powell's 'dovish' tone came somewhat as a surprise to us, and probably ran counter to the thinking of other Fed policy officials," the company continued.

However, the Fed's most recent summary of economic predictions provides hints as to "what the other Fed officials were thinking," indicating that Powell's fellow Fed officials anticipate better economic growth, greater inflation, and a little increase in the Fed's longer-term rate.

US Data

When markets are closed on Good Friday, the United States will issue the core personal consumption expenditures price index, which is the Fed's favoured indicator of underlying inflation.

Excluding food and energy expenses, the index is expected to grow by 0.3% in February, following its largest monthly gain in a year in January.

Although it updated its estimate for economic growth, the Fed this week maintained its plans to drop interest rates three times this year. However, it said that officials needed more proof that inflation is decreasing before it eases.

The weekly report on initial unemployment claims, durable goods orders, updated GDP, and new home sales statistics are also included in the economic calendar.

World Inflation

The Reserve Bank of Australia's officials will be keeping a close eye on Wednesday's inflation statistics in case there are any positive surprises, as February's data will reflect more price changes for a variety of services, whose decline has been slower than that of goods.

The numbers could reinforce the argument that, as the economy slows, the RBA should hold off on cutting rates for a little while longer.

The yearly rate of inflation is predicted by economists to increase slightly from 3.4% in January to 3.5% in February.

Tokyo is scheduled to reveal its inflation data on Friday, but given that the Bank of Japan officially raised interest rates last week—for the first time in 17 years—there could be less fanfare.

(Sources: investing.com, reuters.com)