Will we see fireworks? Also, this week, the PCE Inflation report for May drops on Friday, while Micron Technology and Nike headline earnings.
Stocks are coming off a mixed week, as the S&P 500 ticked lower while the Dow Jones Industrial Average, Nasdaq, and Russell 2000 all rose slightly.
The S&P 500 dropped for the second consecutive week, falling just 0.2% to 5,968. The Nasdaq Composite, on the other hand, rose 0.2% to finish the week at 19,447.
The Dow Jones was essentially flat, ticking up about 9 points for the week to 42,207, while the Russell 2000 index also increased 9 points to 2,109.
It was a surprisingly calm week, given the fact that the Federal Open Market Committee (FOMC) met on interest rates and released its quarterly dot plot. Then again, the outcome, no rate changes, was widely anticipated, so markets took it in stride.
The Fed takes center stage again this week as Fed Chair Jerome Powell testifies before both houses of Congress in his Semiannual Monetary Policy Report to Congress.
On Tuesday morning at 10:00 a.m. he testifies before the House Financial Services Committee, and on Wednesday at 10:00 a.m. he testifies before the Senate Banking Committee.
These are usually more about grandstanding politicians than any real substance from Powell. But this year, the Congressional theatrics could be dialed up a bit as there is a lot of pressure from the administration and Republicans on Powell to lower rates.
PCE inflation, Micron, and Consumer Confidence
Speaking of rates, a key indicator for the FOMC in determining rates, Personal Consumption Expenditures (PCE), gets released on Friday.
PCE inflation, the Fed’s preferred gauge of inflation, has dropped for three straight months, reaching 2.1% in April which is just above the Fed’s target of 2.0% annual inflation.
But two weeks ago, the Consumer Price Index (CPI) showed that inflation increased in May to 2.4%. That might suggest that the PCE inflation rose in May as well. Economists are projecting that the PCE rate ticks up to 2.3% in May, from 2.1%.
Markets will also be looking to another key economic indicator this week, Consumer Confidence. The Consumer Confidence index improved in May, marking the first time the index has climbed in five months. However, the expectations index was still below 80, which indicates the consumers still see a recession ahead.
Last week, the University of Michigan’s Surveys of Consumers showed improvement in June. It was the first time the index has risen in six months. Will Consumer Confidence follow suit?
Finally, earnings have slowed dramatically, but there are a few names worth watching this week.
Among the most notable are Carnival Cruise Lines and FedEx on Tuesday; semiconductor firm Micron Technology and investment bank Jefferies on Wednesday; and Nike and Walgreens on Thursday.
