Wall Street heads into a busy week with investors balancing inflation data, energy market shocks, and a fresh wave of corporate earnings.
Inflation takes center stage midweek. Thursday brings the final Q4 GDP revision, with UBS analysts expecting little change at 0.6% annualized versus the preliminary 0.7%.
Friday delivers the March Consumer Price Index (CPI), with UBS forecasting core CPI up 0.27%, nudging the year-over-year rate from 2.46% to 2.66%.
Deutsche Bank adds believe that the impact of the largest energy supply shock since the 1970s “will certainly be on full display” this week.
Both Deutsche Bank and UBS agree that the inflation data could significantly influence market expectations for Federal Reserve policy. UBS notes that the March FOMC minutes “should reflect the range of views among FOMC participants in a March meeting shrouded with uncertainty over the outlook,” highlighting concerns about inflation running above target and the effects of supply shocks on expectations. They add that the general message will likely underscore that policy is “well positioned to respond to risks to both sides of the dual mandate.”
Economic data is packed this week. Tuesday sees February durable goods orders, while Thursday delivers February personal income and consumption, with UBS predicting slower income but perked-up spending that should push the savings rate lower.
February core PCE prices are expected to rise 0.38%, nudging year-over-year inflation from 3.06% to 2.97%. The March ISM non-manufacturing composite is due Wednesday, and next week, inflation expectations from the FRBNY survey and preliminary April University of Michigan data will give policymakers more insight into price pressures.
The labor market will remain under the microscope after March’s strong jobs report. Deutsche Bank highlights that while payrolls exceeded expectations and the unemployment rate fell to 4.26%, “some of the strength in the March payroll gains likely came at the expense of April given the early Easter Holiday date.”
UBS points to Tuesday’s Vice Chair Jefferson speech, titled “Economic Outlook and the Labor Market,” as an important update from the Fed’s center, especially in light of the latest jobs report.
Earnings and corporate trends will add another dimension. Delta Air Lines (DAL), Constellation Brands (STZ), Levi Strauss (LEVI), and BlackBerry (BB) report this week, providing a glimpse into travel demand, consumer spending, and enterprise adoption. Meanwhile, tech investors will be tuned into the HumanX AI Conference in San Francisco, featuring Nvidia (NVDA), Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL), keeping AI momentum in focus.
With inflation data, Fed signals, and energy markets converging, this week promises a dynamic mix for investors trying to gauge whether Wall Street will march ahead or tread cautiously.