By Bill Hornbarger, Chief Investment Officer
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Three Things to Watch
- Earnings reports will be the most closely followed story of the week with more than 60 members of the S&P 500 on the docket including Bank of America, Goldman Sachs, Johnson and Johnson, Twitter, and Tesla. Investors fully expect a number of negative surprises this earnings season but will pay close attention to forward guidance. Of the 33 S&P companies that have reported quarter to date, 21 have posted positive earnings surprises.
- The economic calendar will provide ample opportunity to gauge how higher mortgage rates are impacting the housing market. The home builders index, building permits, and existing home sales will be out this week and all are expected to continue the decline of recent months.
- The index of leading economic indicators will be released on Thursday and is expected to fall for the fourth consecutive month, conditions typically associated with a recession.
Three Things to Know
- Fed funds futures are pricing a 75-basis point increase next week as the most probable outcome of the FOMC meeting with slight odds of a larger, 100 basis point increase. Futures currently indicate Fed funds will peak at 3.5% next spring and then the Fed will be cutting rates later in 2023. (Source: Bloomberg)
- Gasoline prices at the pump have declined for 33 consecutive days. (Source: Bloomberg)
- The S&P Energy sector is now down more from its 52-week high than the S&P 500 (24.9% vs. 18.5% respectively). (Source: Bespoke, Bloomberg)
The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.