By Peter Bergman (MoneyAmped.com)
During the upcoming shortened holiday week, investors will eagerly await the most recent Federal Reserve minutes for any fresh perspectives on the trajectory of monetary policy.
Profits from chip manufacturer Nvidia (NASDAQ:NVDA) will serve as a crucial assessment of the artificial intelligence craze that has contributed to the growth of U.S. stocks in the past few months.
Walmart (NYSE:WMT) initiates earnings reports from the largest U.S. retailers, Chinese markets resume trading, and PMI data will provide insights into the global economy’s health. Here is the essential information to kick off your week.
Minutes From the Federal Reserve
The upcoming week’s economic calendar is relatively calm due to the holiday break, with the main event being the release of the Federal Reserve’s meeting minutes from January on Wednesday.
Officials decided to maintain interest rates at their meeting on January 30-31 and suggested that a reduction at the next meeting in March is improbable.
Multiple Federal Reserve officials, including Federal Reserve Chairman Jerome Powell, have suggested that additional time is required to ensure that inflation is moving steadily towards the Federal Reserve’s 2% goal.
Currently, the markets anticipate four decreases in interest rates this year, with the first one expected in June. This comes after the markets reduced their expectations for rate cuts due to positive employment, GDP, and inflation figures.
Investors will have the opportunity to listen to Federal Reserve officials throughout the week, including Atlanta Fed President Raphael Bostic, governors Lisa Cook and Christopher Waller, and Vice Chair Philip Jefferson.
The economic schedule also includes information on current home sales and initial claims for unemployment benefits.
Nvidia Financial Results
Nvidia is set to announce its financial results after the U.S. market closes on Wednesday, which will be a significant indicator of market sentiment due to the company’s size and its prominent role in the enthusiasm surrounding the financial potential of AI.
Nvidia’s stocks, known for being top-notch in the artificial intelligence sector, surged by over 200% in 2023 and have increased by approximately 50% this year, propelling the company to the third spot in market cap among U.S. firms, trailing only Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL).
Nvidia’s advancements have contributed to over 25% of the S&P 500’s growth in the current year.
Encouraging developments in Nvidia’s business forecast may boost excitement surrounding artificial intelligence and prolong a market upswing, while any letdown could have significant repercussions across markets.
“When individuals indicate that the market is performing positively this year, they are essentially referring to the strong performance of the technology sector, with Nvidia playing a central role in that,” stated Keith Lerner, the principal market strategist at Truist Advisory Services, in a conversation with Reuters. “The AI industry is buzzing with anticipation, and if that positive outlook isn’t met with financial results, it could have a rapid and negative impact on overall sentiment.”
Retail Profits
The upcoming period for major U.S. retailers commences this week, with Walmart anticipated to adopt a careful approach for 2024 as it discloses results before the market opens on Tuesday.
Walmart is projected to report an approximate $11 billion increase in revenue for the quarter from Nov. 1 to Jan. 31, representing a 4% growth, as per LSEG estimates referenced by Reuters.
The rising cost of living continues to weigh heavily on numerous American families, as consumer prices surged beyond predictions in January, dampening expectations for potential interest rate reductions by the Federal Reserve.
Due to the ongoing high grocery prices, an increasing number of consumers are turning to Walmart for its competitive food prices.
With its significant presence in the retail industry, Walmart is projected to announce revenue of $645 billion for the fiscal year 2024, surpassing its nearest rival by more than two-fold.
Experts mentioned by Reuters anticipate that Walmart will demonstrate improved profitability due to reduced supply chain expenses and the declining cost of fuel since November. Expected increase in net income by 8%.
Purchasing Managers’ Index Information
Concerns about a worldwide economic downturn have diminished as the U.S. economy, supported by its robust labor market, has proven to be resilient.
Despite China’s economic struggles and the anticipated downturn in Germany’s economy this year, PMI data released worldwide on Thursday is expected to reveal a more positive outlook beyond the United States.
Despite being in contraction territory, the January PMI for the eurozone reached its highest point in six months, and the region managed to steer clear of a recession towards the end of last year, as indicated by the most recent GDP figures. The German fourth-quarter GDP figures and the Ifo business sentiment index will be released on Friday. German business confidence improved in the previous month.
Growing economies beyond China, particularly India and the Middle East, are robust, and the U.S. PMI is expected to stay in growth territory following a peak in January.
Chinese Market Rebound
Chinese markets are set to resume trading on Monday following the week-long Lunar New Year break, with investors eager to observe Beijing’s next moves to support the struggling stock market.
Before the holiday season, officials worked urgently to make every effort to prevent further declines in mainland stocks, which had dropped to their lowest levels in five years.
This involved naming a fresh leader for the nation’s market overseer, recognized for his strict approach to managing risks.
On Sunday, the Central Bank of China maintained a key policy rate at the anticipated level, given the uncertainties surrounding the timing of Fed rate cuts, which restrict Beijing’s flexibility in adjusting monetary policy.
At the same time, the most recent information regarding new home prices, set to be released on Friday, will reveal the extent of the decline in the nation’s troubled property market.
