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Top 5 Things to Watch in Markets in the Week Ahead

EconomyAug 22, 2021 07:24AM ET
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© Reuters.

By Noreen Burke

Investing.com -- The main event in the coming week is the Federal Reserve’s annual symposium, with investors hoping for indications on when the Fed will begin tapering the monetary stimulus that has powered stocks to record highs. The economic calendar also features a string of economic data, including updates on home sales, durable goods and personal income and spending. Equity markets could be looking at a choppy week after last weeks Fed minutes rattled investors. Earnings will continue with Best Buy , Dell and HP among the companies reporting and in the euro zone PMI data will give some fresh insights into how the economy is performing. Here’s what you need to know to start your week.

  1. Jackson Hole

The Fed is expected to communicate its plans for slowing its $120 billion per month asset purchase program, the first step down the road to eventual interest rate hikes.

But the prospect of stimulus being reduced at a time when the rise of the highly contagious delta variant is clouding the outlook for the economic recovery has spooked markets.

The Fed announced Friday that its annual symposium would be held online instead of at its usual location in Jackson Hole, Wyoming. The symposium will run from Thursday through Saturday, but the main event will be the keynote speech by Fed Chair Jerome Powell, scheduled for 10 AM ET (1400 GMT) on Friday.

Last week’s minutes of the Fed’s July meeting pointed to a greater likelihood of a taper beginning this year and Powell's speech could be the last hint at the central bank’s next steps before its September policy meeting.

  1. Economic data

Besides the Fed’s annual get-together market watchers will also have to digest a slew of economic data in the week ahead, including reports on home sales, durable goods and personal income and spending.

Figures on existing home sales are released on Monday, followed a day later by a report on new home sales. Data on durable goods orders is due out on Wednesday and initial jobless claims numbers will be released Thursday. Revised figures on second-quarter GDP are also out on Thursday but are expected to show little change.

Friday brings the release of personal spending data along with the core PCE price index, the Fed's preferred gauge of inflation, which has been running near a 30-year high.

  1. Choppy markets

One of the main risks facing equity investors is the prospect that the Fed will begin scaling back its support for the economy just as growth starts losing momentum and the delta variant threatens to rollback reopenings across the country.

"We got such tremendous Federal Reserve monetary support for the economy for some time, so the market has trepidation about Fed taper and what that is going to do for growth," said Rob Haworth, senior investment strategy director at U.S. Bank Wealth Management.

Last week Goldman Sachs economists lowered their tracking estimate of U.S. economic growth in the third quarter to 5.5% from 9% due to the impact of the delta variant.

While stocks are still hovering near record highs all three major U.S. indexes posted weekly losses last week after tumultuous trading and more volatility looks likely to be in store in the week ahead.

  1. Earnings

While the second-quarter reporting season has essentially run its course, there are still some companies left to report during the week.

JD.com (NASDAQ:JD), Palo Alto Networks (NYSE:PANW) and Madison Square Garden (NYSE:MSGS) are reporting on Monday. Best Buy (NYSE:BBY), Nordstrom (NYSE:JWN), Urban Outfitters (NASDAQ:URBN) and Toll Brothers (NYSE:TOL) are some of the names reporting on Tuesday. Salesforce (NYSE:CRM) and Dick’s Sporting Goods are due to report on Wednesday. HP, (NYSE:HPQ) Dell (NYSE:DELL), Gap (NYSE:GPS), Abercrombie and Fitch (NYSE:ANF), Dollar General (NYSE:DG), Dollar Tree (NASDAQ:DLTR), Ulta Beauty (NASDAQ:ULTA) and Peloton (NASDAQ:PTON) will all report on Thursday.

It’s been a stellar earnings season - so far 476 of the companies in the S&P 500 have posted results and of those, 87.4% have beaten consensus, according to Refinitiv data.

  1. Euro zone

The euro zone will publish PMI data on Monday and while easing restrictions are expected to boost travel supply chain issues are expected to act as a drag on manufacturing activity. At the same time, Germany will publish the latest reading of its Ifo index, which is expected to ease slightly from a two-and-a-half year high.

On Thursday the European Central Bank will publish the minutes of its July meeting, when it unveiled updated forward guidance on interest rates and implemented a new monetary-policy strategy designed to bolster inflation.

The minutes will be scrutinized for clues on how future stimulus plans may evolve beyond the current planned end date for the ECB’s asset purchase program in March.

-Reuters contributed to this report

Top 5 Things to Watch in Markets in the Week Ahead
 

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Comments (13)
star enterprises star enterprises
star enterprises star enterprises Aug 22, 2021 10:26PM ET
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great
eze chukwudi
eze chukwudi Aug 22, 2021 6:43PM ET
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what about wheat?
Dr Mark Hollands
Dr Mark Hollands Aug 22, 2021 11:48AM ET
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What about oil?
Ronald Warren
Ronald Warren Aug 22, 2021 11:48AM ET
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Good Luck. No B S. there. The outlook for the economy is reflected in the price.
New Jazenevd
New Jazenevd Aug 22, 2021 11:48AM ET
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Oil will be Ok. China and India will continue consuming increasing amounts of oil, while US oil production gets depressed by politics.
Siya Zulu
Siya Zulu Aug 22, 2021 11:48AM ET
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Biden insistent on putting more rigs in service to push down the price, meanwhile America isn't using as much from API data?🙄
Install Expert
Install Expert Aug 22, 2021 11:19AM ET
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More FUD. As usual. Oh well, my crypto is banging still.
Kaveh Sun
Kaveh Sun Aug 22, 2021 10:49AM ET
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Bad econ numbers r good for the market because Fed cant stop. Good numbers r bad.
Nwakor uchechukwu
Nwakor uchechukwu Aug 22, 2021 9:47AM ET
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let's see how tomorrow's minutes will be
Ronald Warren
Ronald Warren Aug 22, 2021 9:44AM ET
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Liberals are beating the "Variant" drum, but Americans have moved on. We know this is like every other severe virus that has come and gone. In Florida we're living our lives and yes, some of us will die.
Meru Pet
Meru Pet Aug 22, 2021 9:44AM ET
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we wouldn't die without the covid, we would be immortal...
Jason Patcher
Jason Patcher Aug 22, 2021 9:44AM ET
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I agree Ronald, but everyone still needs vaccinated and kids in schools should wear masks untill they are
Millennial Metals
Millennial Metals Aug 22, 2021 9:28AM ET
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The fact that our entire financial system and bubble economy relies on money printing is just sad. This will lead to an epic collapse
New Jazenevd
New Jazenevd Aug 22, 2021 9:07AM ET
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Fed creates new money out of thin air to cover up government overspending and the latter process will not stop as long as Dems control both WH and Congress. This is bad for the country, though the market will continue moving higher fueled by this new money.
Show previous replies (3)
bret lafrance
bret lafrance Aug 22, 2021 9:07AM ET
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what are you talking about - the republicans controlled both houses and the presidency and they jacked up spending and cut revenue with a corp tax givaway. both parties have been partying with our taxes while real wage growth has been stagnant for 20 years
bret lafrance
bret lafrance Aug 22, 2021 9:07AM ET
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NewJ has to be a russia bot
New Jazenevd
New Jazenevd Aug 22, 2021 9:07AM ET
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bret lafrance  Another attempt of misleading narrative, likely from another dem supporter. Dems used to spend more and ran higher budget deficits than Reps. Once they get control of all branches, it is runaway spending, both under Obama in 2009-10 and Biden now.
James Johannsen
James Johannsen Aug 22, 2021 9:07AM ET
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2 wings from the same bird get out of the left right paradigm lie
Jason Patcher
Jason Patcher Aug 22, 2021 9:07AM ET
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premise doesn't match up, government is poor because only the poor pay taxes. good old bill Clinton balances the budget before you knew anything about politics. republicans and tax loopholes are why government is poor. information age - look it up
Abbas Khan
Abbas Khan Aug 22, 2021 9:06AM ET
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what happened with gold bullish or bearish
Abbas Khan
Abbas Khan Aug 22, 2021 9:06AM ET
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what about gold expectations
New Jazenevd
New Jazenevd Aug 22, 2021 9:06AM ET
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Gold is old stuff, losing relevance with every year passed.
James Johannsen
James Johannsen Aug 22, 2021 9:06AM ET
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that's why every country and companies are buying it
Meru Pet
Meru Pet Aug 22, 2021 9:06AM ET
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old stuffs are popular
New Jazenevd
New Jazenevd Aug 22, 2021 9:06AM ET
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Meru Pet  Old stuffs are popular among some folks only. Talking about gold specifically, it is popular among uneducated, in investment terms, folks, who get their financial knowledge about the world from Harry Potter and Lord of the Rings.
David Helms
David Helms Aug 22, 2021 8:59AM ET
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Lack of confidence in congress and this administration will also be detriments
Jack Seeley
Jack Seeley Aug 22, 2021 7:56AM ET
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Delta variant seems the biggest unknown in this mix..it could be the biggest threat?
Kings Wales
Kings Wales Aug 22, 2021 7:56AM ET
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Possibly
Warren Wesley
Warren Wesley Aug 22, 2021 7:56AM ET
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biggest threat is inflation. and government spending.
me ish
me ish Aug 22, 2021 7:56AM ET
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delta is a red herring -it's more tranmissable but not that deadly - this is all playing out like the Spanish flu of 1919 - new strains that are more transmissable, but less deadly each time and with more and more people now with a fair bit of immunity  - especially those who have actual natural immunity - will be able to handle all new weaker variants very well.
 
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