Earnings from major companies across several sectors as well as a Federal Reserve meeting are likely to be the major movers in a busy week for the markets, Prudential’s Chief Market Strategist Quincy Krosby said Monday in her weekly “Connecting the Dots” outlook.
Another potential mover is important economic data due to be released this week, she said.
Three of the four so-called FANG tech companies (Facebook, Amazon, Netflix and Google) report this week after Netflix results last week showed a strong quarter. In energy, companies including Exxon-Mobil and Chevron are set to announce results, as well as major pharmaceutical, consumer product and telecommunications companies.
“It’s a very important week for earnings,” Krosby said. “And the earnings numbers that have come out, most of the companies – just over 70 percent – have beaten the estimates.”
Since companies reporting this week represent a cross section of sectors, they provide a good view of domestic and global economies, in addition to company specifics, she said.
The Federal Open Market Committee begins meeting Tuesday with a statement due to be released Wednesday afternoon. Investors will be focused on guidance on how the Fed plans to wind down its $4.5 trillion balance sheet, Krosby said.
While there are no expectations for a rate hike, analysts are trying to gauge whether the Fed expects to raise rates again this year. The Fed funds futures market is factoring in a 37 percent chance of another move in 2017, after Federal Reserve Chair Janet Yellen, during her testimony on Capitol Hill, sounded more concerned about inflation missing the Fed’s 2 percent target.
“What the statement says is going to be important in terms of which way that needle goes,” Krosby said.
Economic data this week may be positive after some numbers showed strength last week. The first reading of the second-quarter gross domestic product is due Friday morning, after last quarter registered 1.4 percent. This time, analysts are hoping for something just below 3 percent, she said. Also, manufacturing data is due from the Richmond, Virginia, Fed on Tuesday and the Kansas City, Missouri, Fed on Thursday. Durable goods orders data is due Friday.
“Overall, a very busy week with much for the market to digest,” she said.
To talk to Quincy about her views of the market, contact Lisa M. Bennett or Dara Scerbo.
Read Quincy Krosby’s full Q3 Market Commentary: Third Quarter Checkup
Lisa M. Bennett
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.