Risk appetite is starting to stabilize after a sharp selloff in technology shares late last week. Investors are keeping a close eye on a packed calendar of economic data and central bank announcements. After last week’s tech-led selloff, markets are looking for clarity on how the Federal Reserve’s recent rate cuts have affected the economy.
Key releases include US employment figures, retail sales, and inflation data, which will offer insight into whether the economy is cooling or still resilient.
“It’s shaping up to be a busy week for financial markets,” said Kathleen Brooks, research director at XTB. “Investors are flocking to gold as we approach a torrent of US economic data and the last of this year’s central bank decisions.”
The week will be dominated by a backlog of US data delayed during the government shutdown, including November payrolls on Tuesday, October retail sales, and the November consumer price index on Thursday. These releases will offer a first glimpse into whether the Federal Reserve’s 75-basis-point rate cuts in recent months were warranted. Analysts warn that stronger-than-expected job growth or inflation could unsettle markets and drive gold to new highs.
After last week’s mixed US session, where the S&P 500 fell 0.6% and the tech-heavy Nasdaq dropped 1.6%, investors are watching to see if the market continues rotating away from AI-focused technology stocks. The so-called “Magnificent 7” tech giants lost ground, while the broader S&P 500 saw gains from more cyclical sectors, including airlines and entertainment.
“The rotation away from tech has allowed other sectors to play catch-up,” Brooks said. “But this week’s economic data will test whether the Fed’s rate cuts were economically sound.”
Analysts expect US payroll gains of roughly 50,000 per month for October and November, with the unemployment rate holding steady at 4.5%. Meanwhile, inflation is expected to remain above the Fed’s 2% target, with the November CPI likely showing a year-over-year increase around 3%. “Both of these datapoints, though, are likely to be very noisy indeed, owing to data collection issues stemming from the government shutdown,” said Michael Brown, senior research strategist at Pepperstone.
On the earnings front, investors will be monitoring reports from Micron Technology Inc (NASDAQ:MU), Nike Inc (NYSE:NKE, XETRA:NKE), FedEx Corp (NYSE:FDX, XETRA:FDX), Accenture PLC (NYSE:ACN), General Mills Inc (NYSE:GIS, XETRA:GRM), and Carnival Corp (NYSE:CCL) for clues about the broader economy and the ongoing AI investment cycle.