US stock markets are starting the week on a slower note after the NYSE closed on Monday for Presidents’ Day. But while traders get a long weekend, the back half of the week is packed with economic data that could move markets.
Thursday will bring the Federal Reserve’s January meeting minutes and initial jobless claims, followed by Friday’s preliminary fourth-quarter GDP numbers, plus December personal spending and income reports.
Analysts are expecting solid growth in Q4. UBS predicts real GDP rose 2.4% on an annualized basis, helped by steady consumer spending and strong equipment investment. “Core PCE prices likely rose 0.36% in December, bringing the 12-month rate to 2.96%,” UBS noted, adding that housing data will provide more clues about a market still facing high mortgage rates.
On the earnings front, Walmart Inc (NYSE:WMT, XETRA:WMT), Alibaba Group (NYSE:BABA), and Palo Alto Networks Inc (NYSE:PANW, XETRA:5AP) are all reporting, while the Chinese New Year holiday could add some extra pressure on US consumer-focused stocks.
Last week, US Treasuries rallied even as equities underperformed, shrugging off fears that Chinese banks were reducing their US debt holdings. “The economic data and the tame January CPI report remain more important to markets than stories about de-dollarization,” said Kathleen Brooks, research director at XTB.
Brooks also highlighted the impact of the AI scare trade, which has weighed on tech stocks. “While AI is making great strides, it still needs humans to be effective,” she said, noting that the sell-off may have gone too far, with some tech firms now trading at more reasonable valuations.
Bill Adams, chief economist at Comerica, said the Fed is likely to hold rates steady until at least May, citing stronger-than-expected January jobs data and persistent inflation pressures.
Investors will be watching closely for any signals from the Fed about the pace of rate cuts this year, along with the housing and consumer numbers, which could shape market sentiment as February moves forward.