The incoming US inflation data as well as the earnings announcements by Wall Street banks may trigger fresh volatility for the S&P 500 in the week ahead.
Even as we await the pivotal US jobs report due later today (Friday, April 7), while noting that US stock markets have the day off on this Good Friday, traders and investors are also keenly aware of the slate of market-moving events due over the coming week.
The incoming US inflation data as well as the earnings announcements by Wall Street banks may trigger fresh volatility for the S&P 500 in the week ahead.
Monday, April 10
Tuesday, April 11
Wednesday, April 12
Thursday, April 13
Friday, April 14
The CPI is the index used to measure overall inflation, i.e. the change in prices that consumers pay for goods and services.
And here’s what markets are forecasting for this tier-1 data:
Overall, stock bulls (those hoping prices will move higher) want to see further evidence that US inflation is slowing down.
After all, stubbornly elevated inflation has been enemy #1 of the US central bank, the Federal Reserve.
And the Fed has raised US interest rates by 475 basis points over the past 12 months in a bid to quell inflation that was running at a multi-decade high.
And the S&P 500, with its higher concentration of US tech stocks, generally, does not like the prospects of US interest rates moving higher if the Fed is forced to prolong its fight against still-stubborn inflation with even more rate hikes.
Once every quarter, companies whose shares are listed on the US stock markets have to reveal to the public how well it performed financially during the previous quarter.
This period is known as “earnings season”.
And the official curtain raiser is the results out of JPMorgan, the largest US bank.
Also on Friday, other financial heavyweights such as Wells Fargo, BlackRock, and Citigroup are also due to announce their respective earnings.
Hence, any further commentary from these banking C-suites next week about potentially further contagion, or the risk of a wider US banking/financial crisis that ramps up the risk of a recession, would be closely scrutinised by the markets.
Let’s consider the VIX index, which measures how much volatility is expected for the S&P 500 over the next 30 days.
The VIX index is also more commonly known as the stock market’s “fear gauge”.
Note that the 30-day period ahead not only includes the upcoming CPI print and US earnings season, but also the Fed’s next decision on its interest rates due May 3rd.
Yet, the US stock market appears rather sanguine despite such looming event risks, with the VIX index rooted around its lowest levels so far this year.
With the VIX now at 18.40, that’s also lower than the 19.80 level that’s been its average reading over the past 30 years.
Still, that doesn’t mean that we’ll see guaranteed calm next week.
The vigilant trader and investor will certainly be paying close attention to the incoming CPI and earnings results, and awaiting potential opportunities that may be uncovered.
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A highly experienced financial journalist and producer with more than seven years of experience gained across some of Southeast Asia’s (SEA) most prominent business broadcasters.