We saw another week of red in the market this past week, with the major US indices down between 2%-3% week-over-week. Although there weren’t any surprises in terms of the interest rate hike, Wall Street was caught a bit off guard by the target Federal Funds Rate for the end of 2023. This, of course, led to a market-wide sell-off, sending the indices careening down.
This week, the Fed announced a 50 basis point hike, which was certainly a warm welcome, when compared to all of the recent 75 basis point hikes we’ve seen. However, Wall Street was not expecting the 2023 target for the Federal Funds Rate to come in at 5.00%-5.25%. This came as a shock, as inflation has been coming down, leading many to believe that a u-turn is in the cards for the near future. However, hopes of a u-turn were squashed when Jerome Powell spoke shortly after the announcement, sounding much more hawkish than anticipated.
Now that we have the Fed rate hike out of the way, we’ve got a rather quiet week ahead of us. On Tuesday, we’ll receive some information on building permits and housing starts, however, this information is likely to move the market in a meaningful way. We’ll also see existing home sales numbers on Wednesday, which are similarly unlikely to move the market.
However, the real potential market mover comes in on Friday, PCE data. While there shouldn’t be much of a shock when PCE data comes out, if there is a large beat or miss, expect markets to move accordingly. On Friday, we’ll also get some information on real disposable income, as well as real consumer spending, which are always good to pay attention to!
Although this week is rather slow in terms of earnings releases, there are some interesting companies reporting earnings, like the ones below:
12/19 – Carnival Corporation (CCL)
12/20 – Nike (NKE), General Mills (GIS), FedEx Corporation (FDX)
12/21 – Micron Technology (MU)
12/22 – CarMax (KMX)
On Monday, CCL will provide some great intel as to how the travel industry is faring amidst all of the present economic uncertainty. We’ll hear from some incredibly important consumer-facing companies on Tuesday as well. GIS and NKE will provide commentary on how the consumer is spending their money, and the current trends they are seeing.
We’ll also hear from FedEx on Tuesday, which will likely be the most important earnings release of the week. Logistics companies like FedEx and UPS have their fingers on the pulse of the US economy since together they have a virtual duopoly in the last-mile delivery space.
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