What you need to know this week in the markets

Minutes from the Federal Reserve’s policy-making meeting in November are expected to help shape the shortened holiday week on Wall Street as markets look to rebound from a losing week.

US stock and bond markets will be closed on Thursday, November 11. 24, on the occasion of Thanksgiving Day. Trading will also end early on Black Friday, with markets closing at 1 p.m. ET.

A reading of the discussions from the US central bank meeting earlier this month, scheduled to be released on Wednesday, will be the culmination of a lighter economic calendar in the days ahead. The timing of earnings will also be relatively clear as third quarter reports enter their home stretch.

Stocks posted a losing week last week despite modest gains on Friday after a chorus of hawkish Fedspeak dampened optimism highlighted by softer inflation data in October.

The S&P 500 fell 0.7% last week while the Nasdaq Composite lost about 1.6% as central bankers claimed in nearly a dozen speeches throughout the week that they intended to follow up with an aggressive policy tightening. The Dow Jones Industrial Average was roughly flat for the week.

Minutes from the latest meeting of the FOMC, the Federal Reserve’s committee that votes on monetary policy, are expected to show officials expect a half-point rate hike at their December meeting.

Atlanta Federal Reserve Chairman Raphael Bostic was the latest Fed member to signal the likelihood, saying in remarks Saturday in Florida that he was comfortable walking away from 75-point increases. at the next meeting, but assertive rates could hit 4.75%-5% before the Fed is done with its current tightening cycle.

“If the economy performs as I expect, I think further tightening of 75 to 100 basis points will be warranted,” Bostic said during an address to the Southern Economic Association in Fort Lauderdale. “It is clear that more is needed, and I believe that this level of the policy rate will be sufficient to contain inflation over a reasonable time horizon.” Bostic is not currently a voting member of the FOMC.

Federal Reserve Bank of Atlanta Chairman Raphael W. Bostic. REUTERS/Clodagh Kilcoyne

Investors cheered the easing in inflation reports, but Bostic called the numbers a “mixed bag.” The consumer price index (CPI) rose 7.7% last month, from 8.2% in September. While the number of price increases posted fell faster than expected in October, inflation remains more than three times higher than the Federal Reserve’s price stability target of 2% – even as the authorities raised interest rates six times this year, including four consecutive increases of 0.75%.

Fed Chairman Jerome Powell told a press conference after the meeting this month that he and his colleagues had “some way to go” in mitigating the price spike, admitting the chart of the inflation had become more difficult.

“That means we have to have a more restrictive policy, and that narrows the path to a soft landing,” he said.

Aggressive interest rate hikes risk tipping the US economy into recession, with Fed officials recently more openly acknowledging this risk.

“Fed Chairman Powell recalibrated monetary policy at the November FOMC meeting by adopting a new “velocity vs. destination paradigm’ – indicating an intention to achieve a higher terminal federal funds rate while doing so at a slower pace,” EY Parthenon chief economist Gregory Daco said in a recent note. “The determination of central banks to aggressively tighten monetary policy as well as the lagged effects of monetary policy on the economy increase the chances of excessive tightening.”

Federal Reserve Board Chairman Jerome Powell speaks at a news conference following a two-day closed Federal Open Market Committee meeting on interest rate policy in Washington , United States, November 2, 2022. REUTERS/Elizabeth Frantz

Federal Reserve Board Chairman Jerome Powell speaks during a news conference in Washington, U.S., November 2, 2022. REUTERS/Elizabeth Frantz

Goldman Sachs raised its projection for the Federal Reserve’s terminal rate to a range of 5% to 5.25%, starting another 25 basis point hike in May, noting that the investment bank’s risks to its forecast of the Fed have tipped upwards.

“Inflation is likely to remain uncomfortably high for some time, and that could put pressure on the FOMC to make a longer run of small hikes next year,” the economists led by Jan Hatzius said.

Elsewhere on the economic calendar this week, readings on durable goods orders and global PMI data will provide investors with the latest snapshots of industrial and manufacturing activity. Measures of new home sales and consumer sentiment through the closely watched University of Michigan survey are also available.

Wall Street is heading towards the end of the earnings season, but the results of Dell Technologies (DELL), JM Smucker (SJM), Zoom Video (ZM) and Dollar Tree (DLTR) will be among the main updates of the business in the coming week.

According to data from FactSet Research, fewer companies are citing concerns about a recession in the third quarter compared to the second quarter.

Among S&P 500 companies that made earnings calls from Sept. 15 to Nov. 16, 26% fewer companies cited the term “recession” — 179 mentioned the word, compared to 242 during the downturn period. last quarter results.

Yet this quarter still marks the third highest number of companies emphasizing concerns about a potential economic slowdown since at least 2010, according to FactSet data.

Economic Calendar

Monday: No notable reports scheduled for publication.

Tuesday: Chicago Fed National Activity IndexOctober (0.10 in the previous month); Richmond Fed Manufacturing Activity IndexNovember (-7 expected, -10 in previous month)

Wednesday: MBA Mortgage Applicationsweek ended Nov 18 (2.7% over the previous week); Durable Goods OrdersOctober preliminary (0.5% expected, 0.4% in previous month); Durable goods excluding transportOctober preliminary (0.1% expected, 0.5% in previous month); Initial jobless claimsweek ended Nov 19 (225,000 expected, 222,000 the previous week); Continuing claimsweek ended Nov 12 (1.507 million in previous week); US S&P Global Manufacturing PMINovember preliminary (50.0 expected, 50.4 in previous month); S&P Global US Services PMINovember preliminary (48.0 expected, 47.8 in previous month); S&P Global US Composite PMIpreliminary November (48.2 in the previous month); University of Michigan Consumer SentimentNovember final (55.5 expected, 54.7 before); Sales of new homesOctober (575,000 expected, 603,000 in previous month); Sales of new homesmonth-over-month, October (-4.6% expected, -10.9% in prior month); FOMC Meeting Minutes, November 1-2

Thursday: Thanksgiving Day. No notable reports scheduled for publication.

Friday: Black Friday. No notable reports scheduled for publication.

Earnings Calendar

Monday: Agilent (A), Dell Technologies (DELL), JM Smucker (SJM), Jacobs Engineering (J), Li Auto (LI), Urban Outfitters (URBN), Weber (WEBR), Zoom Video (ZM)

Tuesday: Best Buy (BBY), HP (HPQ), Abercrombie & Fitch (ANF), American Eagle Outfitters (AEO), Analog Devices (ADI), Autodesk (ADSK), Baidu (BIDU), Burlington Storess (BURL), Canadian Solar ( CSIQ), Dick’s Sporting Goods (DKS), Dollar Tree (DLTR), Guess? (GES), Jack In The Box (JACK), Medtronic (MDT), Nordstrom (JWN), Vipshop (VIPS), VMware (VMW), Warner Music Group (WMG)

Wednesday: Deere (DE), SentinelOne (S)

Thursday: Thanksgiving Day. No notable reports scheduled for publication.

Friday: Black Friday. No notable reports scheduled for publication.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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