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Top 5 things to watch in markets in the week ahead

Published Apr 15, 2023 10:38AM ET Updated Apr 16, 2023 04:52AM ET
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By Noreen Burke

Investing.com -- Earnings season gets underway in earnest while Federal Reserve policymakers will have a last chance to air their views ahead of next month's policy meeting. PMI data could point to the impact of the recent turmoil in the financial sector. Meanwhile, the U.K. and China are to release key economic data.

  1. Earnings season

Banking heavyweights kicked off earnings season on Friday, with JPMorgan (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) all beating expectations, benefiting from rising interest rates and easing fears of stress in the banking system.

First-quarter earnings season hits full stride in the coming week, with results expected from several more big banks including Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) and Bank of America (NYSE:BAC) plus a long list of companies including Netflix (NASDAQ:NFLX), Tesla (NASDAQ:TSLA), IBM (NYSE:IBM) and Johnson & Johnson (NYSE:JNJ).

Analysts now expect S&P 500 earnings to have declined 4.8% in the first quarter from the year-ago period, according to Refinitiv data Friday. That compares with their week-ago forecast for a 5.2% year-over-year decline in the quarter.

"While we don't think earnings season will bring much in the way of good news, expectations are low enough that we may see stocks hold up again after results," Gina Bolvin, president of Bolvin Wealth Management Group in Boston, wrote in a note Friday.

  1. Fed watch

Most investors are betting that the Fed will still hike rates another 25 basis points at its next policy meeting on May 3, despite the minutes of the central bank's March meeting acknowledging the increased risk of a recession later this year after recent turmoil in the financial sector.

In the next few days, investors will have a final chance to hear from Fed officials before they enter their traditional blackout period ahead of the meeting, including New York Fed President John Williams, Governor Michelle Bowman, Governor Christopher Waller and Governor Lisa Cook.

The U.S. is also to release data on existing home sales, a pair of regional manufacturing surveys, and the weekly report on initial jobless claims, which economists expect to show another increase amid a rise in layoffs since the beginning of the year.

  1. PMI data

The Eurozone, the U.S. and the U.K. are to release PMI (purchasing managers index) data on Friday and market watchers will be on the lookout for signs of whether the recent turmoil in the banking sector is already affecting economic growth.

Last week the International Monetary Fund cut its global growth forecast and warned that problems in the financial sector meant the global economy was more likely to underperform rather than outstrip estimates.

The PMI data should show whether growth is slowing, and, if so, how quickly. This question is quickly becoming a major driver for markets as central banks approach the end of their tightening cycles.

Markets are betting on the Fed cutting rates by year-end, an expectation predicated on a major U.S. slowdown in the second half.

  1. U.K. data

The U.K. is to release February employment data on Tuesday, followed by March inflation data a day later, which could determine whether Bank of England officials decide to hike interest rates by another 25 basis points at their meeting next month.

Inflation unexpectedly rose to 10.4% in February, pushed up by higher prices for food, data that likely cemented the case for March's rate hike. Economists expect inflation to return to single digits in March, but this would still be well above the rate of inflation seen in the rest of Europe and the U.S.

While Britain’s economy has managed to avoid a recession, growth has stagnated over the past year.

Markets anticipate the BoE will hike interest rates next month to 4.5% from 4.25%, which would be its twelfth consecutive rate increase since December 2021.

  1. China data

China is to release a flurry of economic data on Tuesday, including reports on first quarter gross domestic product, March retail sales and industrial production, with market participants hoping for more clarity on the uneven recovery in the world’s second largest economy.

While Chinese exports are increasing and credit growth is solid, inflation remains subdued as the consumer and industrial sectors struggle to recover in the wake of the hit from harsh pandemic-era restrictions.

Policymakers have pledged to step up support for the economy, which recorded one of its worst performances in nearly half a century last year due to the strict COVID-19 curbs.

--Reuters contributed to this report

Top 5 things to watch in markets in the week ahead
 

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Comments (7)
jason xx
jason xx Apr 16, 2023 4:45PM ET
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Nobody wants to hear the fed. Also it is a false assumption to say the economy has to slow down massively for the fed to cut rates As long as inflation is falling thats all that matters
Jshyne Powell
Jshyne Powell Apr 16, 2023 4:45PM ET
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I know this sounds dumb and I'm learning but what is fed?
Shoh Asqarov
Shoh Asqarov Apr 16, 2023 3:39PM ET
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Trumps
Amanj Saed
Amanj Saed Apr 16, 2023 11:34AM ET
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fff
Chousein Kozar
Chousein Kozar Apr 16, 2023 11:12AM ET
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All i can see and all can understand is that big fish like jpm c wf gs blk etc. are making a hell of a money and will make even more when the recession phase starts to take over
Prashant Kumar
Prashant Kumar Apr 16, 2023 11:12AM ET
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they get advantage of recession jp Morgan and other big bank as small banks does not have money to give loan and no one ready to deposit money in small Us banks. so big bank get advantage of it
Prashant Kumar
Prashant Kumar Apr 16, 2023 11:12AM ET
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other wise economy slow and financial results will not be good. market will go down by 10% as valuation high based on current earning
Mike Cohen
Mike Cohen Apr 16, 2023 11:12AM ET
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Hard to know where the truth lies! Several big investors predict hard times and are very bearish on the economy, it seems that many invest outside of America and hedge their bets with metals! I'm so broke that all I can afford is an opinion!
Clay Douglass
Clay Douglass Apr 16, 2023 10:36AM ET
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Biden is a pos lying bum.
Maximus Maximus
Maximus Maximus Apr 16, 2023 10:36AM ET
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what did he lie about?
Brad Albright
Brad Albright Apr 16, 2023 10:36AM ET
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Yeah, what did he lie about? Put up or shut up.
Jay Garrelts
Jay Garrelts Apr 16, 2023 10:36AM ET
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He got 10 million more votes than Obama lmfao
Brad Albright
Brad Albright Apr 16, 2023 10:36AM ET
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Ah, another knucklegraggger reality denier. If the truth hurts, someone must be lying (and it was 15 million).
up ok
up ok Apr 16, 2023 10:07AM ET
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lots of people want to kiss up Chinese a$$ including french pres
rob finch
rob finch Apr 16, 2023 7:22AM ET
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Trump
Wojciech Stefaniak
Wojciech Stefaniak Apr 16, 2023 7:22AM ET
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Trump and ... bump.
 
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