Week Ahead on Wall Street: Reading the Tea Leaves

Estimated reading time: 8 minutes

Back to Basics

Last week was a bit of a wake-up call. GDP growth came in below all estimates, while core PCE inflation (aka the Federal Reserve’s preferred measure of inflation) came in hotter than expected.

Weaker growth, but hotter inflation… ouch. Naturally, Treasury yields rose as investor expectations shifted to even fewer interest rate cuts from the Fed this year. To recap, expectations in January were for as many as six or seven cuts this year. Now, many are starting to think even one is unlikely.

That brings us to this week, with important stuff spread out from start to finish: Tuesday’s Employment Cost Index is the most complete measure of wage growth, job openings and the Fed decision will be released on Wednesday, then productivity data drops on Thursday, and we end the week with the April jobs report on Friday. Not to mention more than 170 companies in the S&P 500 are set to report results. 

Just as the Fed has emphasized data dependence, investors will dig into the data for any new clues on the trajectory of the economy. If wage or job growth come in stronger than expected, investors might push rate cut expectations even further into the future – a recurring theme of late. On the earnings season front, earnings per share have come in nearly 10% above consensus estimates, so any continuation of that trend would probably boost stocks and reinforce the idea that the economy isn’t falling apart and businesses are doing just fine.

Very few investors actually expect any interest rate move from the Fed on Wednesday. Instead, they’ll probably spend the afternoon poring through word choice used in the post-meeting statement and dissecting Chair Jerome Powell’s comments in the press conference. It’ll be an exercise in reading tea leaves, hoping to get some idea of what’s in the Fed’s future.

Economic and Earnings Calendar

Monday

• April Dallas Fed Manufacturing Activity: This is the Dallas Fed’s survey of manufacturing executives in the region on business conditions and their outlook.

• Earnings: Arch Capital Group (ACGL), Franklin Resources (BEN), Domino’s Pizza (DPZ), Everest RE Group (EG), F5 Networks (FFIV), NXP Semiconductors (NXPI), ON Semiconductor (ON), ViacomCBS (PARA), PerkinElmer (RVTY), SBA Communications (SBAC), Welltower (WELL)

Tuesday

• Q1 Employment Cost Index: This is the most comprehensive measure of worker compensation, including wages, bonuses, benefits and more.

• April Conference Board Consumer Confidence: How consumers feel about economic conditions may affect their spending habits. This survey places a particular focus on job availability and the state of the labor market.

• February FHFA House Price Index: This is a broad measure of single-family house prices released by the Federal Housing Finance Agency.

• February S&P CoreLogic Case-Shiller Home Price Index: This is a private sector measure of national home prices. After a period of slight decline in the second half of 2022 and early 2023, the index returned to growth and is now at record highs.

• April Dallas Fed Non-Manufacturing Activity: This is the Dallas Fed’s survey of services industry executives in the region on business conditions and their outlook.

• Earnings: Archer-Daniels-Midland (ADM), American Electric Power (AEP), Amcor PLC (AMCR), Advanced Micro Devices (AMD), American Tower (AMT), Amazon (AMZN), Air Products and Chemicals (APD), Boston Properties (BXP), Clorox (CLX), CenterPoint Energy (CNP), Caesars Entertainment (CZR), Ecolab (ECL), Edison International (EIX), Essex Property Trust (ESS), Eaton Corp (ETN), Extra Space Storage (EXR), Diamondback Energy (FANG), GE HealthCare Technologies Inc (GEHC), Corning (GLW), Hubbell (HUBB), Incyte (INCY), Invitation Homes (INVH), Gartner (IT), Illinois Tool Works (ITW), Coca-Cola (KO), Leidos Holdings (LDOS), Eli Lilly (LLY), McDonald’s (MCD), Mondelez International (MDLZ), Martin Marietta Materials (MLM), 3M (MMM), Marathon Petroleum (MPC), ONEOK (OKE), PACCAR (PCAR), Public Service Enterprise Group (PEG), Prudential Financial (PRU), Public Storage (PSA), PayPal (PYPL), Republic Services (RSG), Starbucks (SBUX), Super Micro Computer (SMCI), Skyworks Solutions (SWKS), Stryker (SYK), Sysco (SYY), Molson Coors Brewing (TAP), Trane Technologies (TT), UDR (UDR), Zebra Technologies (ZBRA)

Wednesday

• FOMC Interest Rate Decision: The Federal Reserve will announce any changes to monetary policy after the conclusion of its two-day FOMC meeting, in addition to providing commentary on the economy. It’s one of eight regularly scheduled meetings per year.

• April ADP Employment Report: This survey, released by ADP and usually released a day or two before the official government jobs report, offers insight into private sector employment trends.

• March Job Openings: A key measure of business demand for labor is the number of job openings, since reducing openings is easier and preferable to layoffs.

• April ISM Manufacturing PMI: This index from the Institute for Supply Management tracks how purchasing managers across the manufacturing sector feel about the business environment.

• March Construction Spending: Construction data is a leading indicator of business activity.

• March Wards Total Vehicle Sales: Cars are a big ticket item for consumers, so underlying vehicle sales trends can help shine a light on demand for durable goods.

• Weekly Mortgage Applications: Mortgage activity gives insight on demand conditions in the housing market.

• Earnings: Automatic Data Processing (ADP), Aflac (AFL), American International Group (AIG), Albemarle (ALB), Allstate (ALL), ANSYS (ANSS), APA Corp (APA), American Water Works (AWK), CDW (CDW), CF Industries Holdings (CF), CH Robinson Worldwide (CHRW), AmerisourceBergen (COR), Cognizant Technology Solutions (CTSH), Corteva (CTVA), CVS Health (CVS), Dayforce Inc (DAY), DuPont de Nemours (DD), Devon Energy (DVN), eBay (EBAY), Estee Lauder Companies (EL), Eversource Energy (ES), Etsy (ETSY), First Solar (FSLR), Generac Holdings (GNRC), Global Payments (GPN), Garmin (GRMN), Host Hotels & Resorts (HST), IDEXX Laboratories (IDXX), Johnson Controls International (JCI), Kraft Heinz (KHC), Mastercard (MA), Mid-America Apartment Communities (MAA), Marriott International (MAR), MetLife (MET), MGM Resorts International (MGM), Mosaic (MOS), Monolithic Power Systems (MPWR), Marathon Oil (MRO), Norwegian Cruise Line Holdings (NCLH), Paycom Software (PAYC), Pfizer (PFE), PPL (PPL), PTC (PTC), Qualcomm (QCOM), Qorvo (QRVO), Bio-Techne (TECH), Vici Properties (VICI), Verisk Analytics (VRSK), Ventas (VTR), WEC Energy Group (WEC), YUM! Brands (YUM)

Thursday

• Q1 Productivity and Unit Labor Costs: These measures provide a breakdown of how productive workers were per hour of work and at what cost.

• April Challenger Job Cuts: The firm Challenger, Gray & Christmas tracks the number of layoff announcements each month by sector.

• March Trade Balance: Trade, made up of exports and imports, is an important driver of economic activity.

• March Factory and Durable Goods Orders: These metrics give insight into underlying trends for leading cyclical indicators.

• Weekly Jobless Claims: This high frequency labor market data gives insight into filings for unemployment benefits. Jobless claims have continued to show a labor market that remains strong despite having cooled.

• Earnings: Apple (AAPL), Ameren (AEE), AES (AES), Ametek (AME), Amgen (AMGN), Aptiv (APTV), Baxter International (BAX), Becton Dickinson and Company (BDX), Booking Holdings (BKNG), BorgWarner (BWA), Cardinal Health (CAH), Church & Dwight (CHD), Cigna (CI), Cummins (CMI), ConocoPhillips (COP), Camden Property Trust (CPT), Coterra Energy Inc (CTRA), Dominion Energy (D), Digital Realty Trust (DLR), DaVita (DVA), Consolidated Edison (ED), EOG Resources (EOG), Exelon (EXC), Expedia Group (EXPE), Federal Realty Investment Trust (FRT), Fortinet (FTNT), Huntington Ingalls Industries (HII), Hologic (HOLX), Howmet Aerospace (HWM), Intercontinental Exchange (ICE), Illumina (ILMN), IQVIA Holdings (IQV), Ingersoll Rand (IR), Iron Mountain (IRM), Kellogg (K), Kimco Realty (KIM), Linde PLC (LIN), Alliant Energy (LNT), Live Nation Entertainment (LYV), Moody’s (MCO), Moderna (MRNA), Motorola Solutions (MSI), Parker-Hannifin (PH), Pinnacle West Capital (PNW), Quanta Services (PWR), Pioneer Natural Resources (PXD), Regency Centers (REG), Regeneron Pharmaceuticals (REGN), Southern Company (SO), Stanley Black & Decker (SWK), Teleflex (TFX), Targa Resources (TRGP), Vulcan Materials (VMC), WestRock Co (WRK), Xylem (XYL), Zimmer Biomet Holdings (ZBH), Zoetis (ZTS)

Friday

• April Employment Situation Summary: This monthly blockbuster release from the Labor Department gives a comprehensive look at employment, wages, and hours worked in the previous month.

• April ISM Services PMI: This index, released by the Institute for Supply Management, tracks how purchasing managers across different services industries feel about the business environment.

• Fedspeak: Chicago Fed President Austan Goolsbee will take part in a panel discussion at the Hoover Institution.

• Earnings: Cboe Global Markets (CBOE), CBRE Group (CBRE), Equinix (EQIX), Hershey (HSY), Microchip Technology (MCHP), Monster Beverage (MNST), Trimble (TRMB)

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