The First Slice for Monday, May 16, 2022

Investors could get a reprieve in the week ahead from the vicious selling cycle that has gripped the stock market since late March.

Stocks bounced off of Thursday’s washout lows and were set to exit the week with reduced losses after Friday’s rally. Buyers on Friday hunted for bargains among small caps, biotechnology names, the Arkk Innovation ETF, and other growth names that were hardest hit.

The S&P 500 jumped back above the key 4,000 level Friday, after touching 3,858 on Thursday — near the 3,800 to 3,850 area that chart analysts have been targeting for a bottom. But while it seems like the market could bounce temporarily, market technicians say that zone will likely be tested again later on.

In the week ahead, investors will continue to look for clues on the course of the central bank’s interest rate hiking path in both economic reports and comments from Fed officials.

Fed Chairman Jerome Powell is slated to speak at a Wall Street Journal conference Tuesday afternoon. For now, the market expects a half-point interest rate hike at the June meeting and another in July, with possibly a third in September. The central bank raised its fed funds target rate by a half-point this month, after a quarter-point hike in March.

The health of the consumer will be a major focus in the coming week. The economic calendar includes April retail sales and also a look at the housing sector, with the National Association of Home Builders’ survey; both reports are set for release Tuesday, with housing starts coming on Wednesday and existing home sales Thursday.

Walmart, Home Depot and Target are set to report earnings next week, and these big chain stores could provide good insight into the impact of inflation on consumer spending and attitudes.

Perhaps the most telling thing for investors in the coming week will be just how the stock market trades after its effort to bounce back Friday.

The S&P 500′s dip to 3,858.87 on Thursday took the index to a decline of 19.55% from its high on an intraday basis — very close to the official 20% decline for a bear market.

The unrelenting run-up in bond yields also slowed, after the 10-year yield peaked this past week at 3.2%. The 10-year was at 2.93% Friday.

Week ahead calendar

Monday

Earnings: Warby Parker, Take-Two Interactive, Tencent Music, Ryanair, Weber

8:30 a.m. Empire State manufacturing

8:55 a.m. New York Fed President John Williams

4:00 p.m. TIC data

Tuesday

Earnings: Walmart, Home Depot, Vodafone, JD.com

8:00 a.m. St. Louis Fed President James Bullard

8:30 a.m. Retail sales

8:30 a.m. Business inventories

9:15 a.m. Philadelphia Fed President Patrick Harker

9:15 a.m. Industrial production

10:00 a.m. Business inventories

10:00 a.m. NAHB survey

2:00 p.m. Fed Chairman Jerome Powell at a conference sponsored by The Wall Street Journal

2:30 p.m. Cleveland Fed President Loretta Mester

6:45 p.m. Chicago Fed President Charles Evans

Wednesday

Earnings: TargetCisco Systems, Lowe’s, TJX, Burberry, Tencent Holdings, Analog Devices, Shoe Carnival, Bath and Body Works, Synopsys

8:30 a.m. Housing starts

8:30 a.m. Building permits

4:00 p.m. Philadelphia Fed’s Harker

Thursday

Earnings: BJ’s Wholesale, Applied Materials, Deckers Outdoor, Ross Stores, Palo Alto Networks, VF Corp, Eagle Materials, Kohl’s, Grab Holdings, Vipshop

8:30 a.m. Initial claims

8:30 a.m. Philadelphia Fed manufacturing

10:00 a.m. Existing home sales

10:00 a.m. Leading index

4:00 p.m. Philadelphia Fed’s Harker

Friday

Earnings: Deere, Foot Locker, Booz Allen Hamilton

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