All main stock indexes and all 11 of the S&P 500 (SPX) sectors surged on Friday, pulling the markets higher for the week. The two back-to-back weekly increases helped stocks recover much of the ground lost during three weekly declines in April.
Investor anxiety was palpable ahead of the Federal Open Market Committee (FOMC) meeting on Wednesday, swinging in opposite directions. Though Fed Chair Jerome Powell did move from “when” to “if” about the prospect of the rate cuts this year, he strongly pushed back against the possibility of a rate hike. With the “higher for longer” doctrine having already sunk in, markets breathed out a sigh of relief upon hearing the news.
Powell also reiterated that the central bank remains data-dependent, continuing to closely follow the incoming economic reports for input into their policy decisions. So, when Friday’s labor-market report came out “just right”, showing weaker-than-expected job gains and easing wage growth, investors interpreted it as a sign that rate cuts are still on the table for 2024.
While an important factor, the job numbers are just one data point for the central bank to input into their models. With so much at stake, markets are expected to react strongly to future data releases, paving the way for volatile trading in the next months.
Three Economic Events
Here are three economic events that could affect your portfolio this week. For a full listing of additional economic events, check out the TipRanks Economic Calendar.
» March’s Consumer Credit Change – Tuesday, 5/7 – This report calculates the change in the total amount of outstanding credit extended to individuals for personal expenditures, excluding loans secured by real estate. Investors and analysts use consumer credit data to assess the extent to which consumers are using credit to pay for products and services, as the change in consumer credit has a strong correlation with both consumer confidence and expenditures.
» May’s Michigan Consumer Sentiment Index (preliminary reading) – Friday, 5/10 – This report, published by the University of Michigan, portrays the results of a monthly survey of consumer confidence levels in the United States. The level of confidence affects consumer spending, which contributes about 70% of the U.S. GDP.
» May’s UoM 5-year Consumer Inflation Expectations (preliminary reading) – Friday, 5/10 – This report is the result of the survey conducted by the University of Michigan. The survey results convey consumers’ views of long-term inflation and are used as a component of the Fed’s calculations of the Index of Inflation Expectations.
For more exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.
