Wall Street bounced back Friday but still turned in a losing week. Questions about Federal Reserve interest rate cuts and rising geopolitical tensions dominated trade and will continue to be key themes to watch. Good jobs news — strong hiring last month with elevated but moderating wage inflation — was treated as such Friday. But weakness earlier in the week, including Thursday’s major reversal on spiking oil prices , proved too much to overcome in one session. The Dow Jones Industrial Average , S & P 500 and Nasdaq all finished lower for the week. U.S. oil benchmark, West Texas Intermediate crude , jumped 4.5% for the week. Supply concerns sparked by escalating conflicts in the Mideast and Ukraine, coupled with the economic resiliency in the U.S., translated into higher energy prices, a move we’re continuing to monitor given the impact higher oil has on just about every company in the S & P 500, along with the business and consumers those companies rely upon for sales and therefore earnings. In the week ahead, we get two key inflation reports that could sway the odds on when the Fed might begin cutting rates and the start of the first quarter earnings season with two Club names. Consumer prices : The main report to watch for markets will be the March consumer price index (CPI). released Wednesday before the opening bell. With Fed rate cut expectations for this year down to three or fewer from six at the start of 2024, the CPI will get extra attention. Friday’s robust employment report knocked the odds of a June cut to about 50/50. The shelter component of CPI — large and unavoidable costs for American consumers — has been a sticky source of inflation, keeping the overall index higher. As of Friday, economists were looking for a 3.4% year-over-year increase in the headline CPI and a 3.7% year-over-year rise in core CPI, which excludes volatile food and energy prices. Producer prices: The March producer price index (PPI) is out Thursday. CPI carries more weight because it speaks to the prices consumers pay, which is the Fed’s primary concern. However, PPI is important because it provides insight into input costs. A greater-than-expected rise in input costs could indicate price hikes on the horizon as companies look to protect profits by passing higher costs through to consumers. That would be a negative in terms of getting the rate of inflation down and add to the view that we simply do not need rate cuts for the time being. As of Friday, economists were looking for a 2.3% year-over-year increase on both headline and core PPI readings. Club Earnings : Two Club names report quarterly results next week — Constellation Brands before the bell on Thursday and Wells Fargo on Friday morning. For Modelo and Corona maker Constellation, it’s all about beer sales momentum. In our review of the top five portfolio stocks from February’s Monthly Meeting to last week’s March meeting, we highlighted Nielsen data showing an improvement in beer sales trends with Constellation gaining market share. That said, it’s important to remember that the earlier months of the quarter were hurt by poor weather. In addition to the results, we will be interested in what management has to say about the cadence of beer sales from month to month. Wine sales have been weak. But we know that. So, on wine — and spirits, which is part of the overall category — we’ll be listening for anything management can provide regarding plans to turn things around and/or perhaps divest. Jim Cramer has been saying for some time now that Constellation should get rid of its wine and spirits portfolio and put all its energy behind beer. Regarding Wells Fargo, management in late February reaffirmed full-year guidance at the UBS Financial Services Forum. That said, there could well be conservatism baked into this guidance. Contained in the fourth-quarter 2023 release, we learned management was assuming five Fed rate cuts when determining their outlook. As noted in our analysis at the time, “lower rates mean less money for traditional lenders like Wells Fargo. Should we get fewer cuts, Wells Fargo could see higher NII than management is forecasting.” With the market now expecting only three cuts, with chances of even less should inflation remain above the Fed’s 2% target and the economy continue to hold up, we wouldn’t be surprised to see NII (net interest income) guidance be revised higher at some point. (Our other financial stock, Morgan Stanley , reports earnings on April 16.) Here’s a look at all the earnings and economic numbers ahead as we consider other moves in the portfolio after three trade alerts this week . Tuesday, April 9 Before the bell: Tilray (TLRY), Neogen (NEOG) After the bell: WD-40 (WDFC), PriceSmart (PSMT), SMART Global (SGH) Wednesday, April 10 8:30 a.m. ET: Consumer price index Before the bell: Delta Air Lines (DAL) After the bell: Rent the Runway (RENT) Thursday, April 11 8:30 a.m. ET: Producer price index 8:30 a.m. ET: Initial jobless claims Before the bell: Constellation Brands (STZ) , CarMax (KMX), Fastenal (FAST) Friday, April 12 Before the bell: Wells Fargo (WFC) , JPMorgan Chase (JPM), BlackRock (BLK), Citigroup (C), Progressive (PGR), State Street (STT) (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Traders work on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., April 5, 2024.
Andrew Kelly | Reuters
Wall Street bounced back Friday but still turned in a losing week. Questions about Federal Reserve interest rate cuts and rising geopolitical tensions dominated trade and will continue to be key themes to watch.
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April 6, 2024
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