It’s the craziest week yet in 2024, and investors will face more volatility in the week ahead, with important insights about consumers and inflation set to be released at a time when fears of a recession are at their peak. Stocks have been volatile this week after Friday’s disappointing July jobs report stoked fears of a recession and the unwinding of yen carry trades over the weekend added to a pullback. On Monday, the S&P 500 had its worst day since 2022, falling 3%. Then, on Thursday, the broader index pared most of its losses to rise 2.3% for its best performance in about two years after investors got some encouraging labor market data. The rebound continued on Friday, with all three major moving averages closing higher, but all ended the week lower. .SPX 5D mountain A wild week for trading With markets highly sensitive to economic data, data focused on consumer, labor and inflation are likely to drive trading next week – especially amid changes in expectations for the Federal Reserve’s September monetary policy meeting situation. CME Group’s FedWatch tool currently shows a 50-50 chance that the Fed will cut interest rates by a quarter or half a percentage point. Latest data on consumer and producer prices were released, along with data on retail sales and new jobless claims. Major earnings reports from Walmart and Home Depot are also due, which could give investors a deeper look into the state of the consumer economy. “People are nervous,” said Scott Ladner, chief investment officer at Horizon Investments. “Everyone is on edge, so the market may overreact to every little piece of information.” Inflation, labor data Inflation data next week It is likely to receive less attention than last year as the Fed’s efforts to combat price pressures put the inflation report center stage. Recently, the labor market has become the most concerned issue. “Markets are more concerned about the labor market and economic growth than inflation right now,” Ladner said. “If inflation is unusually high, that would be significant, but other than some very, very marginal things, the inflation story “It appears to be over.” Thursday’s stock market gains, for example, came after the latest weekly jobless claims data, a data point that doesn’t usually get much attention, came in slightly weaker than expected, which relieved investors. Concerns about labor market breakdown. Following the report, the S&P 500 had its best day since November 2022. Initial jobless claims as of Thursday are expected to be 233,000 for the week ended August 10. The producer price index released on Tuesday is expected to rise 2.3%. Last month’s retail sales data released on Thursday may also draw some attention as investors look to see whether consumers unhappy with the economy are continuing to buy goods. Retail sales in July are expected to grow 0.3%. ‘Calm’ Markets Although markets recovered somewhat this weekend, many investors believe the S&P 500 could be in for a correction. Citing data going back to 1990, Ryan Grabinski of Strategas noted that the broader index has fallen an average of 14.7% for the year. The S&P 500 is down about 6% from its all-time high. It fell to its lowest level this week, nearly 10% below that record. Investors’ worries also linger. While concerns over the easing of the yen carry trade have largely subsided, especially after the Bank of Japan said it would not raise interest rates amid market volatility, many on Wall Street believe there could be more volatility ahead. “Since many Japanese investors have been buying in the U.S. market and vice versa, this rebalancing of the exchange rate could cause considerable instability in both stock markets.” Toggle Artificial Intelligence. But some suspect the stock market has overreacted this week, with the market no longer as almost certain as it was earlier this week that the Fed will cut interest rates by half a percentage point at its September meeting. Wharton School professor Jeremy Siegel caused a stir on Monday by calling for an emergency interest rate cut, but he has since backed away from those remarks. Chen Li, chief global strategist at Alpine Macro, said the stock market will “calm down” in the coming week as recession concerns ease. He said in his speech that the central bank’s interest rate cut after inflation has eased is a different pattern from other economic cycles. “If you look at all previous cycles, you’ll find that when the economy goes into recession, inflation usually peaks,” Zhao said. “That’s exactly why I feel like people misread the economy this time, because the whole process is supply “driven.” He expects the current market landscape to be no different from the second half of the 1990s, when the Federal Reserve began to loosen interest rates as the U.S. economy continued to expand, thus driving stocks higher. In 1998, the S&P 500 rose 19% in the three months after the Federal Reserve cut interest rates for the first time, according to a UBS report this week. Horizon Investments said: “The economy is slowing, but not slow. The labor market is softening, but not weak. Consumers are objectively in a strong position with very little leverage on their balance sheets.” Ladner . The next phase of growth could be fueled by the Federal Reserve’s interest rate cuts starting later this year, he added. “We think this quarter is likely to be volatile and move sideways as people continue to grapple with growth scares and recession concerns,” Ladner said. “But by the time we get to the fourth quarter, we think those issues will be resolved Solved.” Week Ahead Calendar All Times Monday, August 12 at 2pm ET Treasury Budget (July) Tuesday, August 13 at 8:30am PPI (July) Earnings: Home Depot August 14 Wednesday 8:30 AM Consumer Price Index (July) 8:30 AM Hourly Final Earnings (July) 8:30 AM Average Work Week Final (July) Earnings: Progressive Thursday, August 15 8:30 AM Export Price Index (July) 8:30 AM Import Price Index (July) 8:30 AM Initial Jobless Claims (08/10) 8:30 AM Empire State Index (August) 8:30 AM Philadelphia Federal Reserve Bank Index (August) 8:30 am Retail Sales (July) 9:15 am Capacity Utilization (July) 9:15 am Industrial Production (July) 9:15 am Manufacturing Production (July) 10 am Business Inventories (June) 10 am NAHB Housing Market Index (August) Earnings: Applied Materials, Walmart, Tapestry, Deere & Company. 10-point Michigan Sentiment Preliminary Survey (August)
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