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The S&P 500 Index retreated sharply last week and erased all the gains made earlier this year despite strong corporate earnings and encouraging macro data. It dropped to a low of $6,835 on Friday, down sharply from the year-to-date high of $7,000. This article explores some of the top news to watch this week.
S&P 500 Index retreated despite key positive news
The S&P 500 Index and its ETFs, like SPY, VOO, and IVV, retreated even after the US published strong macro data. A report released on Wednesday showed that the economy added 130k jobs in January as the unemployment rate dropped to 4.3%.
Another report revealed that the headline Consumer Price Index (CPI) retreated to 2.4% in January as it moved nearer to the Federal Reserve's target of 2.0%. This report raised the possibility that the Fed will deliver more cuts this year than expected.
US companies also continued publishing strong financial results. Data compiled by FactSet shows that 74% of all companies in the S&P 500 Index have published their financial results, with the average earnings growth being 13.2%.
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There are signs that Donald Trump is considering lowering steel and aluminum tariffs as he battles the cost-of-living crisis. Such a move will be the most important concession he has made this year.
The S&P 500 Index will likely be muted this week, with the stock market being closed on Monday for the President's Day holiday. Also, most companies in the index have already published their financial results. There will be no major macro data from the United States this year.
Top S&P 500 Index companies will report results this week
The S&P 500 Index will react to earnings by some of the top companies like Medtronic, Palo Alto Networks, Analog Devices, Booking Holdings, Moody’s Corporation, Carvana, eBay, and Garmin.
More companies that will publish their financial results this week are Walmart, Deere, Newmont, and Live Nation. Constellation Energy and Cheniere Energy will release their numbers on Friday this week.
Walmart, the biggest retailer in the United States, will be the most important S&P 500 Index company to watch this week because of its scale. Its market capitalization recently crossed the important milestone of $1 trillion as its sales growth continued.
US to publish key macro data
The S&P 500 Index will release some minor economic data this week. The first report to watch will be the upcoming building permits and housing starts reports, which will come out on Wednesday. It will also release other data, like durable goods and industrial production data on the same day.
The other important macro data to watch this week will be the upcoming US GDP data on Friday. Economists expect the upcoming report to show that the economy grew by 3% in the fourth quarter, lower than the previous estimate of 4.4%.
Most importantly, the Federal Reserve will publish minutes of the last monetary policy meeting on Wednesday. These minutes will provide more information about the last meeting and what to expect in the coming meetings.
Most economists believe that the Fed will cut interest rates at least three times now that inflation has continued moving downwards this year.
Additionally, some Federal Reserve officials like Raphael Bostic, Neel Kashkari, Michele Bowman, and Mary Daly will talk this week and provide more color on the next Federal Reserve actions.
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