Majority of the markets saw fresh all-time highs in the week gone by as a result of strong earnings from Nvidia. However, the next week might see some kind of consolidation in recent gains due to lack of near-term catalysts.
Amidst the uncertainty in equity markets, global investors took some profits from technology stocks in the initial days of the week as they remained cautious about Nvidia’s report. However, after the blockbuster earnings from the AI-darling, global experts decided to pour money back in the technology sector.
After the company’s earnings report, a range of US major indices increased to fresh all-time highs on Thursday. While some experts believe that technology sector might see some consolidation, up until then, multiple expansion in such technology stocks are expected to continue. Long story short, in the preceding week, strong performance seen in technology sector led to fresh all-time highs in equities.
While uncertainty in equity markets prevail, global investors are trying to figure out the performance for the next week. Whether or not the bullish momentum in technology can continue since Nvidia’s earnings are already out? However, considering the market dynamics and upside seen in previous week, we believe that investors are required to take some caution heading in next week.
One catalyst to watch for is Personal Consumption Expenditures Price Index (PCE) which will be released on Thursday. Even though warmer inflation has not impacted bullish sentiment, there is still slightest possibility that markets might see some sort of profit booking if the report comes out surpassing the expectations.
Range of economic data points are expected to come out in the upcoming week. New home sales data should be out by February 26 and, on February 28, data related to advanced international trade in goods, advanced wholesale inventories, EIA crude oil inventories and GDP- second estimate are expected to be released.
As the week proceeds, announcements about construction spending, ISM Manufacturing Index, S&P Global US Manufacturing PMI and University of Michigan Consumer Sentiment should be released on Friday, 1st March 2024.
Coming to the earnings data, companies such as Fidelity National Information Services (FIS), Domino’s Pizza (DPZ), and Zoom Video Communications (ZM) are expected to release earnings reports. On Wednesday, February 28, earnings reports of Baidu (BIDU), Salesforce (CRM), and Snowflake (SNOW) will be released.
Expectations show that the US Federal Reserve officials continue to expect PCE inflation to fall in 2024 and settle to ~2% target by the year 2026. The US Fed will not cut the rates too soon as the central bank wants to be confident that inflation is moving to their target levels.
Talking about fixed-income instruments, bond yields remained flat on week-over-week basis and they have remained ~3-month highs as a result of stronger economic data and warmer inflation.