After breaking a nine-week streak to start 2024, stocks regained momentum last week, with all three major indexes posting gains. The Nasdaq Composite led the way with a 3% increase, while the S&P 500 finished the week within striking distance of a record high. As we head into a holiday-shortened week, here’s what investors can expect on Wall Street.
Wall Street Economic Data and Earnings Reports:
- With U.S. markets closed on Monday for Martin Luther King Jr. Day, the focus will be on results from the financial sector and Wednesday’s retail sales data.
- Retail sales for December are anticipated to rise by 0.4%, reflecting the sustained economic expansion driven by U.S. consumer spending.
- Thursday’s initial jobless claims data and Friday’s University of Michigan consumer sentiment report will be closely monitored for insights into the labor market and consumer confidence.
- Investment banks Goldman Sachs and Morgan Stanley are expected to announce results, providing insights into the performance of the dealmaking business after a challenging year.
Geopolitical Developments:
- Monday marks the official start of the 2024 U.S. presidential election with the Iowa caucuses. Additionally, rising tensions in the Red Sea, highlighted by airstrikes in Yemen, are gaining attention from investors.
Wall Street Inflation and Interest Rates:
- Last week’s mixed signals on inflation, with consumer prices exceeding expectations and producer prices moderating, have influenced market expectations. Investors are now pricing in a 77% chance of a 0.25% rate cut by the Federal Reserve in March.
- Barclays economists expect the Fed to initiate incremental rate cuts starting in March, aligning with a more gradual pace than what the market currently anticipates.
Tech Sector Performance:
- The financial sector has taken the spotlight in the early stages of earnings season. However, attention will soon shift to the technology sector, which played a pivotal role in the market’s performance in 2023.
- Results from major tech companies, including Meta Platforms, Alphabet, Amazon, and Tesla, will be crucial in influencing the overall direction of the market.
Wall Street Weekly Calendar:
- Tuesday: Earnings from Goldman Sachs, Morgan Stanley, PNC Financial, and Interactive Brokers. NY Fed Empire Manufacturing data.
- Wednesday: Retail sales data for December, MBA Mortgage Applications, and Federal Reserve Beige Book.
- Thursday: Initial jobless claims, housing starts, building permits, and Philly Fed business outlook. Earnings from PPG, Fastenal, Bank OZK, KeyCorp, and others.
- Friday: University of Michigan consumer sentiment, 1-year inflation expectations, and existing home sales. Earnings from Travelers, State Street, Regions Financial, Ally, and others.
As the week unfolds, investors will be closely watching economic indicators, earnings reports, and geopolitical developments for cues on market direction and potential policy changes.
Wall Street Facts:
1. Birthplace of Finance: Wall Street’s legacy dates back to the 17th century, born from an actual wall built by Dutch settlers to defend against invaders. Over time, it transformed into the nerve center of American finance, housing the iconic New York Stock Exchange and countless financial institutions.
2. Power and Regulation: The “Wall Street rule” aimed to curb conflicts of interest and protect individual investors, highlighting the tension between financial power and regulatory safeguards.
3. Wall Street vs. Main Street: While cooperation between major financial firms and everyday investors can offer mutual benefits, a fundamental disconnect often exists. Wall Street’s fast-paced market fluctuations may not always reflect the realities of the “Main Street” economy, leading to periods of misalignment and potential conflicts.
Bonus Fact: Though Wall Street dominates the imagination, New York’s financial district encompasses multiple streets. The actual eight-block-long Wall Street itself isn’t even the district’s center!
These are just a few intriguing facts about Wall Street. Whether you’re fascinated by its historical rise, intrigued by its intricate financial mechanisms, or interested in its complex relationship with the broader economy, Wall Street continues to be a captivating symbol of finance and its impact on the world.
Shayne Heffernan
