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Everything to Know about Macro and Markets

Markets went back and forth between minor gains and losses during the early part of last week, as a rally in AI-related stocks took a breather while market participants anxiously awaited the Federal Reserve’s preferred inflation gauge, Core CPI.

Its release on Thursday showed the inflation measure was in line with expectations, adding to bets the Fed will cut rates in June. Additional reports showed an unexpected decline in consumer sentiment and a further slowing in manufacturing activity, which indicate a cooling economy and provide other pieces of support for those banking on a rate cut.

AI Rally Rages On

Markets staged a two-day rally at the end of the week, which propelled the Nasdaq Composite (NDAQ) over its November 2021 high. The S&P 500 (SPX), the Nasdaq-100 (NDX), and the Nasdaq Composite (NDAQ) rose during the week, while the Dow Jones Industrial Average (DJIA) clocked in a small weekly decline. All four major indexes closed February with gains, registering their fourth straight monthly advance, while the SPX and the NDAQ had their best February since 2015.

In notable corporate news, Nvidia (NVDA) closed above a $2 trillion valuation for the first time. Dell (DELL) surged over 30% after reporting higher-than-expected earnings on AI-optimized server demand and hiking dividends. Super Micro Computer (SMCI) was added to the S&P 500 index after its shares surged over 200% year-to-date, thanks to relentless demand for its AI infrastructure offerings.  

Fed Speak on the Radar

Federal Reserve Chair Jerome Powell will testify before Congress on Wednesday and Thursday. Markets will be closely watching Powell’s testimony to see if it offers any insight into the outlook for monetary policy, which has been firmly centered around maintaining the Fed Funds rate range at 5.25–5.50% percent until inflation is contained and price stability is restored.

However, even if price stability is achieved, officials could be paying more attention to the goal of labor market stability. As the job market remains tight by historical standards, policymakers could be hesitant to implement any further monetary policy loosening to stimulate the economy. This could increase demand for labor at a time when the labor supply is still stretched, reigniting inflation pressures.

In addition, while Q4 GDP growth came down from the previous quarter’s levels, it continues to come in above expectations, with indicators pointing to growth above 2% in Q1 2024. The Fed committee will be closely watching the payrolls and wages data due on Friday for any signs of cooling. If the job market continues to display strength while economic growth remains robust, the timing of the first rate cut could be delayed further.

Upcoming Earnings and Dividend Announcements

The Q4 2023 earnings season is almost over, but several important earnings releases are scheduled for this week.

This week’s most significant event will be the release of the earnings reports of Broadcom (AVGO) and Costco Wholesale (COST). Other notable earnings reports will be published by Target (TGT), Ross Stores (ROST), CrowdStrike Holdings (CRWD), Foot Locker (FL), and DocuSign (DOCU).

Ex-Dividend dates are coming this week for Analog Devices (ADI), Nvidia (NVDA), Cigna (CI), Home Depot (HD), BlackRock (BLK), Automatic Data Processing (ADP), UnitedHealth (UNH), eBay (EBAY), and other dividend-paying firms.

For more exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.

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