Investors will barely have a minute to rest this week, as another Federal Reserve (Fed) interest rate decision, a wide range of incoming economic data and key earnings announcements are likely to make for a volatile week in the financial markets.
The Fed will likely announce its eighth-consecutive interest rate hike on Wednesday, following its first meeting of the year.1 Recent communication from the Fed suggests there will be another gradual decrease in the size of the hike, to 25 basis points. On Thursday, the European Central Bank and Bank of England are also projected to announce rate hikes.
Another busy week of economic releases is on tap, including new purchasing managers’ index (PMI) data for the U.S. manufacturing and service sectors, respectively, on Wednesday and Friday. Economic forecasters are expecting continued cooling in the job market, with January’s labor market report showing 185,000 new jobs added.2
Last but not least, this week will offer a wide range of companies reporting earnings, with more than 100 S&P 500 names set to report. Investors have shown a willingness to look beyond the expected slowdown in earnings so far in January, but the path forward for risk assets is likely to be more challenging in light of the recent surge in valuations.
1Source: MarketWatch- U.S. Economic Calendar; as of 1/30/23
2Source: CNN- Jobs Report to Give Further Clues About Where Economy is Headed; 1/29/23
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