What to know:
- FOMC Rate Decision takes center stage this week, with inflation, GDP, and consumer data expected to influence global markets.
- Microsoft, Meta, Apple, and Amazon earnings will test AI spending, cloud growth, and consumer demand, adding to market uncertainty.
- Bull Theory says the next 72 hours could shape market direction for the rest of the quarter as macro data and Big Tech results converge.
The FOMC rate decision is expected to be the most significant event over the next 72 hours, given that investors have a hectic week ahead. Apart from important economic data from the U.S. and quarterly earnings from leading tech firms, the FOMC rate decision may affect equities, bonds, forex, and crypto markets.
An analyst, Bull Theory, pointed out that there are seven significant events in a couple of days, and this increases the probability of sharp market action.
FOMC Rate Decision and Economic Data Take Center Stage
The week opens Tuesday with the release of the most recent U.S. consumer sentiment report. A weak result could indicate that consumers are cutting back on their spending, indicating concerns regarding economic growth.
On Wednesday, attention is on the FOMC rate decision. It is where the Federal Reserve indicates its stance on the interest rate decision. There is around a 35% probability that there is going to be a change in rates this time.
The inflation and growth forecast from the Federal Reserve will be closely examined by investors, alongside any indication of further policy tightening.
On Thursday, the PCE Price Index will be released; this is the favored gauge of inflation by the Federal Reserve. A more robust inflation reading may increase the rate expectation for a higher rate path.
On the same day, quarterly GDP figures from the U.S. economy are expected. The forecast range is between 2.1% and 2.2%.
The worst scenario for markets will be low growth and high inflation rates together. In this case, there can be an increased probability of stagflation, and the Fed will have few ways of stimulating the economy while increasing the risk of inflation.
In conclusion, the week will end on Friday with the consumer sentiment index from the University of Michigan. Investors will be looking at inflation expectations since this data is used by Federal Reserve policymakers.
Also Read | Payward Expands Onchain Infrastructure With Magic Labs Acquisition
Microsoft, Meta, Apple and Amazon Face Earnings Test
Earnings of firms are bound to increase the uncertainty in that particular week.
This week, Microsoft and Meta will release their earnings. For Meta, earnings are projected to be $7.18 – $7.24, and revenue will be about $60.2 billion.
Apart from the income and expenses, there will be a concentration on AI investments, performance in ads, and guidance. If anything reflects that there is weakness in business and/or higher costs for AI, this will impact other tech firms as well.
Markets have become more sensitive to AI spending following an increased amount of spending by Alphabet in the segment. Revenue growth is unlikely to be enough for shareholders if expenses increase faster than expected.
Earnings from both Apple and Amazon will be available on Thursday. Earnings estimates for Apple are $1.88 per share, and those for Amazon range from $1.81 to $1.85 per share.
The most watched segment for Amazon is AWS due to the enterprise cloud computing market needs and AWS’s capability of leveraging AI adoption.
For Apple, the report performance will be evaluated based on iPhone sales and services revenue and its artificial intelligence plan.
FOMC Rate Decision Could Set Market Direction
This week is significant for the FOMC rate decision, inflation reports, GDP, consumer surveys, and earnings of four big tech companies.
The Bull Theory believes that the above-mentioned factors will guide the market in the upcoming quarter. Good growth, decreasing inflation, and strong earnings will support risk assets, including crypto assets. However, high inflation, poor guidance, or hawkish FOMC results may increase global selling pressure.
Also Read | Polygon Records $4.3B World Cup Market Settlement Volume
Be the first to comment