What to know this week in markets

Minutes from the Federal Reserve’s November policy-setting meeting are anticipated to assist form the holiday-shortened week forward on Wall Street as markets look to rebound after a dropping week.

The U.S. inventory and bond markets shall be closed on Thursday, Nov. 24, in observance of the Thanksgiving vacation. Trading may also finish early on Black Friday, with markets shuttering at 1 p.m. E.T.

A readout of discussions from the U.S. central bank’s gathering earlier this month, set for launch Wednesday, would be the spotlight from a lighter financial calendar in days forward. The earnings calendar may also be comparatively sparse as third-quarter reporting heads into its last stretch.

Stocks registered a losing week last week despite modest gains Friday after a chorus of hawkish Fedspeak dampened optimism surfaced by lighter October inflation knowledge.

The S&P 500 fell 0.7% final week whereas the Nasdaq Composite shed about 1.6% as central bank members asserted in almost a dozen speeches all through the week they intend to press on with aggressive coverage tightening. The Dow Jones Industrial Average was roughly flat for the week.

Minutes from the FOMC’s newest assembly, the Federal Reserve committee which votes on financial coverage, are possible to present officers planning a half-point fee hike at their December assembly.

Federal Reserve Bank of Atlanta President Raphael Bostic was the most recent Fed member to sign this probability, saying in remarks on Saturday in Florida that he was comfortable to move away from 75-basis-point increases on the subsequent assembly however asserted charges could attain 4.75%-5% earlier than the Fed is finished with its present tightening cycle.

“If the economy proceeds as I expect, I believe that 75 to 100 basis points of additional tightening will be warranted,” Bostic mentioned in remarks to the Southern Economic Association in Fort Lauderdale. “It’s clear that more is needed, and I believe this level of the policy rate will be sufficient to rein in inflation over a reasonable time horizon.” Bostic isn’t at present a voting member of the FOMC.

President of the Federal Reserve Bank of Atlanta Raphael W. Bostic. REUTERS/Clodagh Kilcoyne

Investors have cheered on easing inflation reviews, however Bostic referred to as figures a “mixed bag.” The Consumer Price Index (CPI) rose at a 7.7% clip last month, down from 8.2% in September. While the quantity confirmed value will increase cooled quicker than anticipated in October, inflation stays greater than thrice the Federal Reserve’s value stability goal of two% – whilst officers have raised rates of interest six instances this 12 months, including four straight 0.75% hikes.

Fed Chair Jerome Powell mentioned in a post-meeting press convention this month he and his colleagues have “some ways to go” on easing surging costs, admitting the inflation image has change into more difficult.

“That means we have to have policy more restrictive, and that narrows the path to a soft landing,” he said.

Aggressive interest rate hikes risk tipping the U.S. economy into recession, with Fed officials recently coming to acknowledge this risk more openly.

“Fed Chair Powell recalibrated monetary policy at the November FOMC meeting by adopting a new ‘speed vs. destination’ paradigm – indicating an intention to reach a higher terminal fed funds rate while doing so at a slower pace,” EY Parthenon Chief Economist Gregory Daco said in a recent note. “Central banks’ determination in tightening monetary policy aggressively along with the lagged effects of monetary policy on the economy increases the odds of an overtightening.”

Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a closed two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, U.S., November 2, 2022. REUTERS/Elizabeth Frantz — Federal Reserve Board Chairman Jerome Powell speaks during a news conference in Washington, U.S., November 2, 2022. REUTERS/Elizabeth Frantz

Goldman Sachs has lifted its projection for the Federal Reserve’s terminal rate to a range of 5% to 5.25%, tacking on another 25-basis-point hike in May, noting the investment bank’s risks to its Fed forecast have tilted to the upside.

“Inflation is likely to remain uncomfortably high for a while, and this could put pressure on the FOMC to deliver a longer string of small hikes next year,” economists led by Jan Hatzius said.

Elsewhere on the economic calendar this week, readings on durable goods orders and global PMI data will offer investors the latest snapshots of industrial and manufacturing activity. Measures of new home sales and consumer sentiment through the University of Michigan’s closely-watched survey are also on tap.

Wall Street is barreling towards the end of earnings season, but results from Dell Technologies (DELL), J.M. Smucker (SJM), Zoom Video (ZM), and the Dollar Tree (DLTR) will be among some of the key corporate updates in the coming week.

Fewer companies are citing concerns about a recession in the third quarter compared to the second quarter, according to data from FactSet Research.

Of S&P 500 companies that conducted earnings calls from September 15 to November 16, 26% fewer companies cited the term “recession,” — 179 mentioned the word, down from 242 in the last quarter’s earnings period.

Still, this quarter still marks the third-highest number of companies emphasizing concerns over a potential economic downturn since at least 2010, per FactSet’s data.

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Economic Calendar

Monday: No notable reports scheduled for release.

Tuesday: Chicago Fed National Activity Index, October (0.10 during prior month); Richmond Fed Manufacturing Activity Index, November (-7 expected, -10 during prior month)

Wednesday: MBA Mortgage Applications, week ended Nov. 18 (2.7% during prior week); Durable Goods Orders, October preliminary (0.5% expected, 0.4% during prior month); Durables Excluding Transportation, October preliminary (0.1% expected, 0.5% during prior month); Initial Jobless Claims, week ended Nov. 19 (225,000 expected, 222,000 during prior week); Continuing Claims, week ended Nov. 12 (1.507 million during prior week); S&P Global U.S. Manufacturing PMI, November preliminary (50.0 expected, 50.4during prior month); S&P Global U.S. Services PMI, November preliminary (48.0 expected, 47.8 during prior month); S&P Global U.S. Composite PMI, November preliminary (48.2 during prior month); University of Michigan Consumer Sentiment, November final (55.5 expected, 54.7 prior); New Home Sales, October (575,000 expected, 603,000 during prior month); New Home Sales, month-over-month, October (-4.6% expected, -10.9% during prior month); FOMC Meeting Minutes, November 1-2

Thursday: Thanksgiving Day. No notable reports scheduled for release.

Friday: Black Friday. No notable reports scheduled for release.

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Earnings Calendar

Monday: Agilent (A), Dell Technologies (DELL), J.M. Smucker (SJM), Jacobs Engineering (J), Li Auto (LI), Urban Outfitters (URBN), Weber (WEBR), Zoom Video (ZM)

Tuesday: Best Buy (BBY), HP (HPQ), Abercrombie & Fitch (ANF), American Eagle Outfitters (AEO), Analog Devices (ADI), Autodesk (ADSK), Baidu (BIDU), Burlington Storess (BURL), Canadian Solar (CSIQ), Dick’s Sporting Goods (DKS), Dollar Tree (DLTR), Guess? (GES), Jack In The Box (JACK), Medtronic (MDT), Nordstrom (JWN), Vipshop (VIPS), VMware (VMW), Warner Music Group (WMG)