© Reuters
Investing.com – During the upcoming short weekend (due to a holiday tomorrow, Monday), investors will be looking to the latest for any new insights into the direction of monetary policy. Chipmaker Nvidia’s ( ) earnings will be a crucial test of the artificial intelligence fever that has helped fuel gains in US stocks in recent months. Walmart (NYSE:) begins making profits from the largest US retailer, Chinese markets return, and PMI data will highlight the strength of the global economy. Here’s what you need to know to start your week.
1. Federal Reserve meeting minutes
The economic calendar is quiet for the short week leading up to the holiday, with the January Fed meeting the highlight on Wednesday.
Policymakers kept borrowing costs unchanged at their meeting on January 30-31 and indicated that a decline was unlikely at their next meeting in March.
Several Fed officials, including Fed Chair Jerome Powell, have indicated that more time is needed to ensure inflation is on a sustainable path to return to the Fed’s 2% target.
Markets are currently pricing in four-quarter point rate cuts this year, starting in June, after scaling back bets on a rate cut in the wake of recent strong jobs, GDP and inflation data.
Investors will also get a chance to hear from Fed officials during the week, including Atlanta Fed President Rafael, Governors Lisa and Christopher, along with Vice Chairman Philip.
The economic calendar also contains data on and.
2. NVDA profits
Nvidia will report earnings after the close of US market trading on Wednesday in what could be a pivotal test of market sentiment given the company’s size and its place at the center of excitement over the financial promise of artificial intelligence.
Shares of Nvidia, whose chips are considered the gold standard in the artificial intelligence industry, have more than tripled in 2023 and are up another 50% so far this year to make it the third-largest US company by market capitalization after Microsoft (NASDAQ:{ 252 }) and Apple (NASDAQ:).
Nvidia’s gains accounted for more than a quarter of the increase in this year’s index.
Positive updates to Nvidia’s forecasts could increase enthusiasm for AI and extend the market’s upside, but any disappointment would likely have broader implications for markets.
“When people say the market is doing well this year, they really mean technology is doing well, and Nvidia is at the core of that,” Keith Lerner, chief market strategist at Truist Advisory Services, told Reuters. “There is excitement within AI, and if that optimism is not met by profits, you can see that quickly reverberate and impact sentiment.”
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3. Retail company earnings reports
Earnings season for major US retailers begins this week, and Walmart is expected to take a cautious tone for 2024 when it reports results before the market opens on Tuesday.
Walmart is expected to post a roughly $11 billion increase in sales for the quarter from Nov. 1 to Jan. 31, or a 4% increase, according to LSEG estimates cited by Reuters.
Inflation remains a burden on many US families facing higher costs of living and higher-than-expected consumer prices in January, eroding hopes for imminent interest rate cuts from the Federal Reserve.
And with grocery prices still well above pre-pandemic levels, more shoppers are drawn to Walmart because of food costs.
Given its weight in the grocery sector, Walmart is expected to report sales of $645 billion for fiscal 2024, more than double its closest competitor.
Analysts cited by Reuters also expect Walmart to show stronger profitability thanks to lower supply chain costs and lower gas prices since November. Net income is expected to increase by 8%.
4. Purchasing Managers Index (PMI) data
Concerns about the possibility of a global recession have subsided as the US economy, with its strong labor market, remains resilient.
Even with the Chinese economy entering a recession and the German economy expected to decline this year, PMI data released globally as of Thursday should show that the picture outside the United States is not all bleak.
While in contraction territory, the region’s January PMI reached a six-month high and the bloc avoided a recession late last year, the latest GDP data show. German fourth quarter data will also be released on Friday. Note the improvement in German business sentiment last month.
Emerging markets outside China, particularly India and the Middle East, are strong and the US PMI is likely to remain in expansionary territory after reaching six-month highs in January.
5. The return of transactions in Chinese markets
Markets in China return from the week-long Lunar New Year holiday on Monday as investors wait to see what Beijing will do next to support the faltering stock market.
In the run-up to the holiday period, authorities scrambled to do everything they could to stem losses in mainland stocks, which fell to their lowest levels in five years.
This included the appointment of a new head of the country’s market regulator, known for his tough stance on containing risks.
Earlier on Sunday, China’s central bank left its key interest rate unchanged as expected with uncertainty over the timing of Fed rate cuts limiting Beijing’s room to maneuver on monetary policy.
Meanwhile, the latest data on new home prices, due on Friday, will show how deep the downturn is in the country’s beleaguered real estate sector.
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2024-02-18 13:21:00
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