What you should know in the markets this week

Minutes from the Federal Reserve’s November monetary policy meeting are expected to help shape the shortened week before the holiday on Wall Street as markets rebound from a losing week.

US stock and bond markets will close on Thursday, November 24 for the Thanksgiving holiday. Trading will also end early on Black Friday when the markets close at 1pm ET

A release of discussions from the Federal Reserve Board meeting earlier this month, due for release on Wednesday, will be the culmination of a lighter economic calendar in the coming days. The earnings calendar will also be relatively sparse when reporting on the third quarter enters the final stages.

Stocks posted a week of losses last week despite modest gains on Friday, after a chorus of hawkish Fedspeak dampened optimism highlighted by lighter October inflation data.

The S&P 500 fell 0.7% last week, while the Nasdaq Composite lost about 1.6% as central bank officials said in nearly a dozen speeches throughout the week that they intend to proceed with aggressive monetary tightening. The Dow Jones Industrial Average was roughly flat this week.

Minutes from the latest meeting of the FOMC, the Federal Reserve’s committee that votes on monetary policy, are likely to show officials planning a half-point rate hike at their December meeting.

Federal Reserve Bank of Atlanta President Raphael Bostic was the latest Fed member to signal the likelihood, saying in a remark in Florida on Saturday that he was comfortable expecting a 75-rate hike at the next meeting BPS move down but claimed rates could hit 4.75%. -5% before the Fed is done with its current tightening cycle.

“If the economy performs as I expect, I believe an additional 75 to 100 basis points of tightening is warranted,” Bostic said in a speech to the Southern Economic Association in Fort Lauderdale. “It is clear that more is needed and I believe this level of interest rates will be sufficient to contain inflation over a reasonable time horizon.” Bostic is not currently a voting member of the FOMC.

President of the Federal Reserve Bank of Atlanta Raphael W. Bostic. REUTERS/Clodagh Kilcoyne

Investors have welcomed easing inflation reports, but Bostic called the numbers a “mixed bag”. The Consumer Price Index (CPI) rose 7.7% last month compared to 8.2% in September. While figures showed October inflation rates cooling faster than expected, inflation remains more than three times the US Federal Reserve’s price stability target of 2% – even as officials have hiked interest rates six times this year, including four consecutive 0.75%.

Fed Chair Jerome Powell said in a press conference after this month’s meeting that he and his colleagues still have “some ways to go” to ease rising prices and acknowledged that the inflation picture has become more difficult.

“That means we have to have more restrictive policies and that narrows the path to a soft landing,” he said.

Aggressive rate hikes risk plunging the US economy into recession, a risk recently acknowledged by Fed officials more openly.

“Fed Chair Powell recalibrated monetary policy at the November FOMC meeting by embracing a new “velocity vs. target” paradigm – indicating an intention to achieve a higher final money rate while doing so at a slower one Pace happens,” EY Parthenon chief economist Gregory Daco said in a recent note. “Central banks’ determination to aggressively tighten monetary policy, coupled with the lagged impact of monetary policy on the economy, increases the likelihood of excessive tightening.”

Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a closed two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, U.S. November 2, 2022. REUTERS/Elizabeth Frantz

Federal Reserve Board Chairman Jerome Powell speaks during a news conference in Washington, U.S. November 2, 2022. REUTERS/Elizabeth Frantz

Goldman Sachs raised its forecast for the Federal Reserve’s final interest rate to a range of 5% to 5.25% and embarked on another 25 basis point hike in May, noting that the investment bank’s risks to its Fed forecast are inclined upwards.

“Inflation is likely to remain uncomfortably high for a while longer, and this could put pressure on the FOMC to deliver a prolonged series of smaller hikes next year,” said economists led by Jan Hatzius.

Elsewhere on this week’s economic calendar, durable goods orders readings and global PMI data will provide investors with the latest snapshots of industrial and manufacturing activity. Measurements of new home sales and consumer sentiment from the closely monitored University of Michigan survey are also available.

Wall Street is closing in on earnings season, but earnings from Dell Technologies (DELL), JM Smucker (SJM), Zoom Video (ZM) and Dollar Tree (DLTR) will be among the key company updates next week.

According to data from FactSet Research, fewer companies are raising concerns about a recession in the third quarter than in the second quarter.

Of S&P 500 companies that conducted earnings calls from Sept. 15 through Nov. 16, 26% fewer companies used the term “recession” — 179 mentioned the word, up from 242 in the most recent quarter’s reporting period.

Yet this quarter is still the third-highest number of companies raising concerns about a potential economic downturn since at least 2010, according to FactSet data.

economic calendar

Monday: No significant reports planned for publication.

Tuesday: Chicago Fed National Activity IndexOctober (0.10 in previous month); Richmond Fed Manufacturing Activity IndexNovember (-7 expected, -10 last month)

Wednesday: MBA Mortgage Applicationsweek ending November 18 (2.7% in previous week); Durable Goods OrdersOctober preliminary (0.5% expected, 0.4% mom); Commodities without transportOctober preliminary (0.1% expected, 0.5% mom); Initial jobless claimsweek ending November 19 (225,000 expected, 222,000 last week); Ongoing Claimsweek ended November 12 (1.507 million in previous week); S&P Global US Manufacturing PMINovember preliminary (50.0 expected, 50.4 in previous month); S&P Global US Services PMINovember preliminary (48.0 expected, 47.8 last month); S&P Global US Composite PMINovember preliminary (48.2 in previous month); University of Michigan Consumer SentimentNovember finals (55.5 expected, 54.7 before); New Home SalesOctober (575k expected, 603k last month); New Home SalesMoM, October (-4.6% exp., -10.9% MoM); Minutes of the FOMC meeting, November 1st and 2nd

Thursday: Thanksgiving. No significant reports planned for publication.

Friday: Black Friday. No significant reports planned for publication.

results calendar

Monday: Agilent (A), Dell Technologies (DELL), JM Smucker (SJM), Jacobs Engineering (J), Li Auto (LI), Urban Outfitters (URBN), Weber (WEBR), Zoom Video (ZM)

Tuesday: Best Buy (BBY), HP (HPQ), Abercrombie & Fitch (ANF), American Eagle Outfitters (AEO), Analog Devices (ADI), Autodesk (ADSK), Baidu (BIDU), Burlington Storess (BURL), Canadian Solar ( CSIQ), Dick’s Sporting Goods (DKS), Dollar Tree (DLTR), Guess? (GES), Jack In The Box (JACK), Medtronic (MDT), Nordstrom (JWN), Vipshop (VIPS), VMware (VMW), Warner Music Group (WMG)

Wednesday: Deere (DE), SentinelOne (S)

Thursday: Thanksgiving. No significant reports planned for publication.

Friday: Black Friday. No significant reports planned for publication.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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