The upcoming week on Wall Street promises to be eventful with several important developments. First and foremost, major technology companies such as Microsoft Inc (NASDAQ:MSFT), Meta Platforms Inc (NASDAQ:META), Alphabet Inc (NASDAQ:GOOG), and Tesla Inc (NASDAQ:TSLA) are scheduled to report their quarterly earnings. These earnings releases are closely monitored by investors as they serve as barometers for the broader technology industry.
Of particular interest are the recent advancements in artificial intelligence (AI) and concerns surrounding Tesla’s electric vehicle (EV) performance, which could significantly impact investor sentiment. Notably, Meta Platforms’ stock has experienced a remarkable surge in the past six months, adding further intrigued to its earnings report.
Disappointing earnings from market heavyweights, coupled with ongoing tensions in the Middle East and a more hawkish stance from the Federal Reserve (Fed), may further erode investor confidence to hold stocks. Investors may exercise caution and explore hedging strategies to mitigate risks.
Economically, all eyes will be on the first quarter (Q1) advanced gross domestic product (GDP), which is anticipated to show a growth rate of 2.1%, down from the 3.4% recorded in Q4. The advance GDP serves as the first estimate of GDP growth in the United States, offering an early indication of the country’s economic performance before the actual GDP figure is released.
Additionally, key economic indicators such as the Personal Consumption Expenditures (PCE) Price Index, Personal Income, Personal Spending, and Manufacturing & Services Purchasing Managers’ Index (PMIs) will be released this week. The strength and resilience of these indicators could influence the Fed’s decision to keep higher rates.
The March’s PCE, leading up to the Fed’s April 30 to May 1 meeting, is regarded as the central bank’s preferred measure of inflation, impacting its interest rate decisions. Notably, the headline PCE increased by 2.5% year-on-year in February 2024, surpassing the Fed’s target of 2%.
An uptick in PCE could bolster the US dollar, especially if interest rates are expected to remain restrictive for an extended duration. Consequently, this scenario may exacerbate declines in both stocks and bonds, ultimately leading to higher treasury yields.
Besides that, market participants will be paying attention to March’s Durable Goods Orders, New Home Sales and Pending Home Sales, which provide insights into current industrial activity and housing market conditions. Continued strength in home sales, despite elevated prices and financing costs, may provide a positive backdrop for market sentiment and further reinforce market resilience.
In essence, the upcoming week is poised to be dynamic, with earnings reports, geopolitical tensions, various economic data, and housing market indicators all influencing investor decisions.
Disclaimer: ProsperUs Manager of Content Hailey Chung doesn’t own shares of any companies mentioned.
