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Top 5 Things to Watch in Markets in the Week Ahead

EconomyMar 07, 2021 06:49AM ET
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© Reuters

By Noreen Burke

Investing.com -- Investors will be closely watching the progress of President Joe Biden's $1.9 trillion pandemic relief plan through Congress this week against a backdrop of concern over what such a large stimulus package could do to inflation and interest rates. Market participants will be focusing on U.S. inflation figures with a report on the consumer price index due out on Wednesday and the producer price index scheduled for Friday. In Europe, the European Central Bank will hold its latest policy meeting on Thursday. Meanwhile, the UK is to publish January growth figures which will reflect a return to a full national lockdown at the start of the year as well as the fallout from Brexit. Here’s what you need to know to start your week.

  1. Stimulus: a double-edged sword?

After the Senate passed President Joe Biden's $1.9 trillion stimulus package on Saturday it will move to a vote in the House on Tuesday. After its passage by the House, it will be sent to Biden, who hopes to sign the bill before enhanced jobless benefits expire on March 14.

The pandemic relief package will give a powerful boost to the economic recovery and to the stock market, but optimism has been offset by fears over rising inflation and interest rates.

Investors have taken the recent run-up in bond yields - which has propelled the benchmark 10-year Treasury yield to levels not seen since before the pandemic - as a sign of potentially damaging inflation expectations.

But U.S. Treasury Secretary Janet Yellen indicated Friday that higher long-term Treasury yields were a sign of expectations for a stronger recovery, not of increased inflation concerns.

  1. U.S. inflation figures

Investors will be closely watching U.S. inflation figures on Wednesday and Friday amid worries over the potential implications of rising price pressures.  

Last week Fed Chairman Jerome Powell said that even if prices jump as anticipated this spring, "I expect that we will be patient," and not change monetary policies that need to remain supportive until the economy is "very far along the road to recovery".

This week Fed officials will be in the traditional blackout period ahead of the central bank’s next meeting on March 16-17. Other reports to watch this week include Thursday’s figures on initial jobless claims and an update on consumer sentiment.

  1. Buy the dip?

With U.S. technology shares sliding, investors are debating whether the decline is an opportunity to buy the dip or a sign of more pain to come for stocks that have driven market gains for years.

Taking advantage of pullbacks in names like Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) has been a winning strategy over the last decade.

Some market participants, however, worry the current decline could be longer-lasting than previous dips, as expectations of a robust U.S. economic recovery fuel a shift away from the “stay-at-home” trade towards stocks set to benefit from the economy reopening. Surging bond yields are accelerating that rotation.

Last week the Nasdaq posted its third straight weekly decline, but reversed losses late Friday to end up 1.6% in a sign some bargain-hunters may have already swooped in after a bumpy week.

  1. ECB meeting

Thursday’s ECB meeting is the main event for the euro zone after extended lockdowns in the first quarter. Policymakers will assess the damage to economic growth against a background of a vaccination rollout that is struggling to gain traction, particularly compared with similar efforts in the UK and the U.S.

ECB head Christine Lagarde will also announce the bank’s new quarterly forecasts at the post policy meeting press conference.

Besides the ECB meeting, the euro zone will release figures for January industrial production on Friday, which are expected to contract.

  1. UK GDP

The UK is set to release January growth figures on Friday, and it will come as no surprise that these are expected to point to a sharp contraction at the start of the year as the country returned to a full national lockdown and the effects of Brexit hit trade.

GDP growth will take a hit from the closure of several consumer service sectors.

But there will also be a hit from manufacturing as the change in EU trade terms kicked in. The jury is still out on how big the economic impact from the change in trade terms could be.

--Reuters contributed to this report

Top 5 Things to Watch in Markets in the Week Ahead
 

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Comments (20)
New Jazenevd
New Jazenevd Mar 07, 2021 1:42PM ET
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New money goes to stocks. They accumulate most of inflation. Stay invested. It is the only way left to protect your wealth in relative terms.
Kaveh Sun
Kaveh Sun Mar 07, 2021 1:40PM ET
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They have to print, raise tax or issue bonds for all these spending. Usd rallied lately, meaning they stop printing. Tax is not raising. The only one left is gov bonds. The media is telling u # all the time.
mario can
mario can Mar 07, 2021 1:40PM ET
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TAXES TO DA MOON!!!!!
Nison Kay
Nison Kay Mar 07, 2021 1:40PM ET
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mario can to Mars.
Bruno Silva
Bruno Silva Mar 07, 2021 12:34PM ET
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Heh this is crazy. I'm getting out of stocks while I'm winning.
Bruno Silva
Bruno Silva Mar 07, 2021 12:34PM ET
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Btw I think a LOT of people here weren't around 2018 which was basically "yesterday" so they are very fresh to believe that another crash can happen after Covid 2020.
Kelly Mayer
Kelly Mayer Mar 07, 2021 12:34PM ET
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The Covid crisis has been used to control and deal with that second crash. it will happen, but it will take years. And will likely happen very differently than we expect.
Nison Kay
Nison Kay Mar 07, 2021 12:34PM ET
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i sold my stocks on Friday only to see them rebound right after.
Tien Huga
Tien Huga Mar 07, 2021 12:04PM ET
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ok tks admin !
Wesley Scott
Wesley Scott Mar 07, 2021 11:58AM ET
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Buy oil and hold till August/September. Buy banks and financials that profit on rising interest rates. The rest is conversation.
Axel Le Gamin
Axel Le Gamin Mar 07, 2021 11:58AM ET
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You are right my friend energy is where the money is I'm still long crude oil and Exxon mobil
Stephen Hubble
Stephen Hubble Mar 07, 2021 11:58AM ET
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Small to medium E&P companies like CPE, CDEV, MTDR, FANG, TALO, etc.. are much better for big gains in oil.
Axel Le Gamin
Axel Le Gamin Mar 07, 2021 11:58AM ET
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Stephen Hubble What's your broker I don't have that many stocks
Safil Patwary
Safil Patwary Mar 07, 2021 11:58AM ET
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Very good advice! Appreciate that!
Axel Le Gamin
Axel Le Gamin Mar 07, 2021 11:58AM ET
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Callon petroleum up 147 percent this month, oh ******you were not lying
Bhagwan Dass
Bhagwan Dass Mar 07, 2021 11:44AM ET
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no economic is rising on higher prices of commodity. no buyer on higher prices
Bruno Valdez
Bruno Valdez Mar 07, 2021 11:44AM ET
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I disagree, there was a heavy surge of newcomers into this months trading. Psychology will scare a few away but will somehow encourage some to buy the "DIP"
mehmet öztürk
mehmet öztürk Mar 07, 2021 11:12AM ET
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I expect markets move sideways this week. Next week would be volatile, as the markets will force the FED to be clear on actions for rising inflation / US Treasury yields. So my strategy this wee is cash in any profits as soon as it arises and then wait till uncertainty diminishes next week after FED.
AMG Ventures
AMG Ventures Mar 07, 2021 11:12AM ET
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buy bitcoin
Jones Jones
Jones Jones Mar 07, 2021 11:12AM ET
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I find the bid and ask price spread in bitcoin too large to trade with little risk
Bobby Hall
Bobby Hall Mar 07, 2021 11:10AM ET
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Who knows? But I expect a knee jerk stimulus spike up Monday.
Mohdshahim Alrawahnehm
Mohdshahim Alrawahnehm Mar 07, 2021 10:59AM ET
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What about the Dow? How Is the stimulas going to affect it? How is is it going to react to it on Monday? What do you guys think?
Axel Le Gamin
Axel Le Gamin Mar 07, 2021 10:59AM ET
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Focus on other instruments not just indices you will make more money. Crude oil is a good buy opportunity right now for the next couple of months
Axel Le Gamin
Axel Le Gamin Mar 07, 2021 10:59AM ET
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The stimulus has been priced in for weeks.Don't expect big moves on the upside with the Dow. It might pop a little on Monday take your profit if it happens. Fear of inflation is dominant
John Conaghan
John Conaghan Mar 07, 2021 10:59AM ET
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if oil keeps rising inflation worries will set in more
Shane Gg
Shane Gg Mar 07, 2021 10:59AM ET
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Axel Le Gamin  Only because OPEC+ didn't raise production near as much as expected. Might be a different story next month.
Bhagwan Dass
Bhagwan Dass Mar 07, 2021 10:52AM ET
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Trump was best than Biden. commodity prices was not high like today . doble prices of edible oil , wheat, corn, copper, crude
Andre Thomas
Andre Thomas Mar 07, 2021 10:52AM ET
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sometimes...the smart thing to say......is nothing at all
Chris Sundo
Chris Sundo Mar 07, 2021 10:43AM ET
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-- BTW, IMO we're not yet done on the recent downside of the indices. I wouldn't be surprised if there was a gonzo up-gap on Monday March 8th followed by another move lower before we snap into a range bound market -- What do you guys 'n gals think?
Venkata Nemala
Venkata Nemala Mar 07, 2021 10:43AM ET
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yes, its a temporary upside and more, I mean a lot more pain on the way till at least APR
Bhagwan Dass
Bhagwan Dass Mar 07, 2021 10:37AM ET
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if investing seeing this messages than give some relief to poor people of world
Bruno Valdez
Bruno Valdez Mar 07, 2021 10:37AM ET
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huh?
apc apc
apc apc Mar 07, 2021 10:37AM ET
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printing more money for the poor. hmm?
Bhagwan Dass
Bhagwan Dass Mar 07, 2021 10:37AM ET
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don't jokes for the poor people. time is not equal every time
Bruno Valdez
Bruno Valdez Mar 07, 2021 10:37AM ET
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we've all been down and have taken any hand we can to come back up. even you.
Bhagwan Dass
Bhagwan Dass Mar 07, 2021 10:18AM ET
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poor people are facing problem on higher prices commodity like edible oil and crude oil in world
Boyoung Schang
Boyoung Schang Mar 07, 2021 10:18AM ET
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Huh?! What do you mean by edible oil? why are olive oil and vegetable oil going up?
Bhagwan Dass
Bhagwan Dass Mar 07, 2021 10:18AM ET
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yes
Kaveh Sun
Kaveh Sun Mar 07, 2021 10:11AM ET
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Yeilds go up because Biden issues too much gov bonds. It Doesnt matter. Fed does matter. If the central bank stops buying gov bonds, market goes down.
Chris Fran
Chris Fran Mar 07, 2021 10:11AM ET
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lol.. the white house does not control the fed.. not this one nor the last but trump sure tried his darnest by bullying Powell via twitter
Adrian White
Adrian White Mar 07, 2021 10:11AM ET
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Kaveh Sun, Biden has nothing to do with issuing government bonds. That's not something that the president does.
Kaveh Sun
Kaveh Sun Mar 07, 2021 10:11AM ET
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Adrian White where does Biden get money for all his policies? Tax is 1. The other is bonds.
Kaveh Sun
Kaveh Sun Mar 07, 2021 10:11AM ET
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Chris Fran u think? Chairman will b out if he doesnt do what the whitehouse want.
Ahmad Youssif
Ahmad Youssif Mar 07, 2021 9:24AM ET
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Don't let the new actions make you fotget the old one, in the final 2018 yiled got up and the growth stocks got down and instead of Corona war you need to.put China war in that time. so what happen after, the growth stocks rose strong and broke the yield. History never forget.
Otis Williams
Otis Williams Mar 07, 2021 9:24AM ET
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You are right .. money makes world go round and when people het money they spend and that alone rises the economy .. thsts why they call it a stimulas packet stimulate the economy common sense just like you .. make it simple for everyone to umderstand
Tobechukwu Olumba
Tobechukwu Olumba Mar 07, 2021 9:24AM ET
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Right. It is the money that people need to invest in crypto and stocks in order to make some of them. Unemployment benefits and the stimulus checks. That is what the stimulus package is all about.
Chris Sundo
Chris Sundo Mar 07, 2021 9:24AM ET
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Otis Williams  -- Except that we've been living off the profits of this 1.9tn stim package since about October 2020 and it's been priced into the market already a few times over.
Azizjon Boytemirov
Azizjon Boytemirov Mar 07, 2021 8:38AM ET
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simple logic lies here.If package 1.9 trillion comes out, market will go up.supply of money increases in the market.supply and demand theory.no need to go further.
NYSE NASDAQ
NYSE NASDAQ Mar 07, 2021 8:38AM ET
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Have you heard about liquidity trap? Mr.Economist.
John Conaghan
John Conaghan Mar 07, 2021 8:38AM ET
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not that simple
Azizjon Boytemirov
Azizjon Boytemirov Mar 07, 2021 8:38AM ET
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liquidity trap works in the field of debt market not in capital market my friend!
Azizjon Boytemirov
Azizjon Boytemirov Mar 07, 2021 8:38AM ET
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you better go through essentials of economics once more!
JD K
JD K Mar 07, 2021 8:09AM ET
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I think Nasdaq has been abandoned by the Fed, and if the high yield does not affect anything on US economy, then the Fed won't go check the high yield
jaisakthi agri seeds
jaisakthi agri seeds Mar 07, 2021 7:42AM ET
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So Market go down side is possible????
Hozefa Bohra
Hozefa Bohra Mar 07, 2021 7:42AM ET
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yes market go deeply down
Jenn foster
Jenn foster Mar 07, 2021 7:18AM ET
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its not a tech bubble, just a sign of the times now. nasdaq will go up again next week, onwards and upwards to new highs
Idrees Kiani
Idrees Kiani Mar 07, 2021 7:18AM ET
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big cap stocks are a bubble. historical high valuations. this will tank
Idrees Kiani
Idrees Kiani Mar 07, 2021 7:18AM ET
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big cap stocks are a bubble. historical high valuations. this will tank
Danny Danny
Danny Danny Mar 07, 2021 7:18AM ET
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Market crash soon, specially on Tech Stocks.
 
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