As the market struggles to regain its footing following a difficult spate of selling last week, an important clutch of data will be released in the U.S., the Eurozone, Japan and China, Prudential’s Chief Market Strategist Quincy Krosby said Monday in her weekly “Connecting the Dots” outlook.
Investors want to be assured that the synchronized global recovery remains intact, she said. Despite the fact that global markets will close for Easter on Friday, the market is in for another busy week. The Case-Schiller Home Price Index, the third reading of fourth quarter GDP, and a look at corporate profits are all expected to show strength. On Thursday, the Personal Income and Outlays Report will provide personal consumption expenditures, or Core PCE, the Fed’s favorite barometer of inflation.
“We’ll have a number of Fed speakers this week,” Krosby said. “The Fed met last week and there are still questions as to whether their view is hawkish or dovish.”
The S&P 500 closed on Friday at its 200-day moving average. This is an important level and if it is broken this week it will lead to more selling pressure. The market is now “oversold,” Krosby said, while fears of a trade war have been muted somewhat as talk of negotiations filter in.
“Trade negotiations were the talk of the weekend,” Krosby said. “We’ll pay attention to the stocks that would be most punished by a trade war—names like Caterpillar, Boeing and Apple. If they gain momentum, it’s indicative of a market that is breathing a lot easier.”
With a holiday-shortened week, both in the U.S. and globally, market volume should be weaker than usual.
“Volume that is reduced can exacerbate moves to the downside, as well as to the upside,” Krosby said. “If this market can gain momentum and go into the long weekend at a higher level, this would indicate that investors and traders have confidence.”
This week’s important data releases:
Monday: New York Federal Reserve President William Dudley speaks
Tuesday: Case-Schiller Home Price Index; Consumer Confidence
Wednesday: Q4 GDP final report; Pending Home Sales Index; Advanced Retail Inventories and Wholesale Inventories
Thursday: Personal Income and Outlays; Core PCE; Consumer Sentiment
Read Quincy Krosby’s full Q1 Market Commentary: Turning the Page.
The views and opinions are those of the author at the time of publication and are subject to change at any time due to market or economic conditions. This is solely for informational purposes. This is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.