Earnings season is here, though this week it gets a quiet start with just one report coming out. Tomorrow it picks up steam — but it’s not just earnings this week. Thursday is shaping up to be a big day for the markets.
Between Netflix (NFLX) earnings and a handful of key economic reports coming out that day, they’ll give us some important clues about the economy.
Let me walk you through the highlights so you know what I’m watching:
Retail Sales Report: The retail sales report is a good way to gauge the health of consumer spending, which makes up a big chunk of the U.S. economy.
When people are spending, it’s usually a sign that things are steady or growing. But if sales are down, it could indicate some pullback from consumers, and that’s something the market will keep an eye on.
Jobless Claims: Every Thursday morning, we get the weekly jobless claims report. This gives us a sense of how many people are filing for unemployment benefits.
If claims are up, it could be a sign of weakness in the job market. But if claims are lower than expected, it means people are staying employed — always a good sign for the broader economy.
Philly Fed Manufacturing Index: This one might not get as much attention, but it’s important if you follow industrial stocks. The Philly Fed Manufacturing Index tells us how factories and manufacturers in the Philly area are doing.
A higher reading shows growth in manufacturing, while a lower reading could mean the sector is cooling off. Since manufacturing plays a big role in the economy, this report can move certain sectors — especially industrials and materials.
The Big Picture: So what does all this mean for us? Thursday could be a market mover, but until then, we’re likely in for some quieter trading, especially on Wednesday, as the market will probably collectively hold its breath.
Bonds are still weak and interest rates are creeping up, which is pushing the dollar higher.
Right now, the dollar index (DXY) is sitting just below 104, which is a big resistance level.
If it pushes through, it could put more pressure on stocks and commodities. But if it fails, we might see the dollar ease up, giving markets a little more room to breathe.
Stay sharp this week, and I’ll be back tomorrow with more insights.
— Geof Smith
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