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The stock market continues to hit record highs.
The S&P 500 (^GSPC) and Nasdaq (^IXIC) both ended the week at record highs. The S&P 500 index rose in 16 of the past 18 weeks for the first time since 1971, according to research from Deutsche Bank.
Over the coming week, Federal Reserve Chairman Jerome Powell’s testimony on Capitol Hill and the February jobs report will test the stock market’s frenzied rally. It also contains the latest information on economic activity and job openings in the service sector. schedule.
Most companies in the S&P 500 have reported their earnings, and the three largest consumer brands – Target (TGT), Costco (COST) and Kroger (KR) – will report their earnings next week.
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Federal Reserve Chairman Jerome Powell is scheduled to give his semiannual monetary policy testimony in the House and Senate starting Wednesday. Investors will be listening closely for updates from Chairman Powell on the overall state of the U.S. economy, the fight against inflation, and when the central bank will start cutting interest rates.
Earlier this week, Bloomberg data showed that markets were pricing in three Fed rate cuts this year starting in June as inflation slowed. This matches recent comments. Recent predictions from Chairman Powell and the Fed itself. The Federal Open Market Committee will release a summary of its latest policy decisions and economic outlook on March 20th.
read more: Impact of Fed interest rate decisions on bank accounts, CDs, loans, and credit cards
Current state of the labor market
The Wall Street consensus now expects the central bank to grow patient in cutting interest rates, with the inflation story stalling recently, with the Fed’s preferred benchmark posting its first monthly gain in a year. Economists say that keeping the labor market resilient will be key to ensuring that the policy decision goes smoothly and the economy avoids recession.
The new jobs report, scheduled for the coming week, will include the latest information on wages and job openings. The highlight is February’s employment statistics, which will be released Friday at 8:30 a.m. Eastern time.
The report is expected to show that rising unemployment added 190,000 nonfarm jobs to the U.S. economy last month. rate It has remained flat at 3.7%, according to Bloomberg data. The U.S. economy shocked Wall Street in January by adding 353,000 jobs, while the unemployment rate held steady at 3.7% for the third consecutive month.
Earnings updates
Earnings season is almost over.
97% of S&P 500 index constituents have reported fourth-quarter earnings, and S&P 500 index fourth-quarter earnings are expected to increase 4% year-over-year, according to new FactSet data . This marks his second consecutive quarter of increased profits for the benchmark index.
What’s notable is that the outlook for earnings growth this quarter hasn’t worsened at the usual pace.
John Butters, senior earnings analyst at FactSet, noted that analysts typically lower their earnings estimates during the first two months of a quarter. Over the past 20 years, earnings have typically been revised downward by an average of 2.9%. Earnings estimates for the current quarter were revised down by just 2.2%.
History shows stocks have more room to run
The biggest story on Wall Street heading into 2024 was the volatile first few months of trading ahead of a year-end rally. Many expected investors to be weighed down by uncertainty surrounding the Federal Reserve’s interest rate cuts and concerns about the election.
That didn’t happen. Both the S&P 500 and Nasdaq Composite had their best Februarys since 2015, following explosive earnings reports from some of the biggest tech companies. The improved earnings outlook has led several Wall Street strategists to raise their year-end targets for the S&P 500.
History tells us that the most likely outcome is for stock prices to continue rising. There have been 28 times since 1950 that the S&P 500 started the year with positive results in January and February, according to research by Ryan Detrick of Carson Group. The benchmark average was positive for the next 12 months on 26 of those occasions. On average, if the first two months were positive, the S&P 500 would return 19.9% annually.
Detrick noted that this is not an accurate prediction of a near 20% return this year, but if the S&P 500 were to rise by the average value, it would be at $5,719 by the end of 2024.
weekly calendar
Monday
Economic news: There are no notable economic announcements.
Revenue: Gitlab (GTLB), Stitch Fix (SFIX), ThredUp (TDUP)
Tuesday:
Economic data: S&P Global US Services PMI, February, final (51.4 expected, 51.3 pre-defined). S&P Global Composite US Composite PMI, fixed value for February (previous value 51.4). ISM service index for February (expected 52.9, previous 53.4). Durable goods orders, January final value (-6.1% compared to the previous year)
Revenue: Box (BOX), ChargePoint Holdings (CHPT), CrowdStrike (CRWD), Nio (NIO), Nordstrom (JWN), Ross Stores (ROST), Target (TGT), Vivid Seat (SEAT)
Wednesday
Economic data: Federal Reserve Chairman Jerome Powell begins his semiannual testimony on Capital Hill. MBA home loan applications, week ending March 1 (-5.6%). ADP private payroll, February (expected +145,000, previous +107,000). FRB Beige Book January
Revenue: Abercrombie & Fitch (ANF), Campbell’s (CPB), Foot Locker (FL), JD.Com (JD), Victoria’s Secret (VSCO)
Thursday
Economic data: Challenger job reductions, YoY, February (-20% YoY). Unit labor costs, Q4 (expected +0.7%, previously +0.5%). Non-agricultural productivity, Q4 (+3.1% expected, +3.2% previously). Number of new unemployment insurance claims for the week ending March 2 (previously 215,000)
Revenue: American Eagle Outfitters (AEO), Big Lots (BIG), BJ’s (BJ), Broadcom (AVGO), Burlington Stores (BURL), Costco (COST), DocuSign (DOCU), Gap (GPS), Kroger (KR), Marvell Technology (MRVL), MongoDB (MDB)
Friday
Economic calendar: Number of non-agricultural sector employees in February (forecast +190,000, previous estimate +353,000). February unemployment rate (expected 3.7%, previous 3.7%). Average hourly wage for February compared to the previous month (forecast +0.2%, previous +0.6%). Average hourly wage in February, compared to the same month last year (forecast +4.3%, previous +4.5%). Average weekly working hours in February (expected 34.3, previous 34.1). Labor force participation rate, February (previously 62.5%)
Revenue: There are no notable earnings releases.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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