Making Sense: In Brief
The week ahead for markets and the economy
Blake: Hi, I'm Blake Taylor, Market and Economic Research Analyst. Phil Neuhart is traveling this week.
Last week, a hot retail sales report and a positive start to first quarter earnings gave us additional confidence that the US economy and markets finished Q1 on a very strong note.
Turning to the week ahead, more companies will report first quarter earnings. While every earnings season matters, this quarter the results are essential. Stocks have shed a fair amount of this year's gains. Inflation is proving more durable than expected. Investors no longer expect big interest rate cuts this year. And as a result, it's earnings growth that investors will look to to sustain this equity market rally.
Turning to the economic data, on Thursday we'll see the initial estimate of GDP growth for the first quarter. Forecasters expect quarterly GDP growth to come in at a little over 2%. But if the report comes in much higher, as some models predict, expect their narrative of a hot economy to grow even louder and the calls for rate cuts to get even quieter.
Finally, the personal consumption expenditures, or PCE, report comes out on Friday. Personal income and spending have grown at a healthy pace so far this year, which makes sense given the continued strength in the labor market. Forecasters estimate personal income grew by five-tenths of a percent and personal spending by six-tenths of a percent in March.
Also in this report is the March print for PCE inflation, the metric the Fed targets in setting its interest rate policy. Core inflation is expected to come in at about 2.8% year on year, indicating—to borrow the Fed chair's words from last week—a lack of further progress so far this year on returning to the stated 2% inflation goal.
So items to watch this week. One, earnings season. Two, first quarter GDP. And three, personal spending and PCE inflation.
Making Sense In Brief Outro Slide
Brent Ciliano
CFA | SVP, Chief Investment Officer
Capital Management Group | First Citizens Bank
8510 Colonnade Center Drive | Raleigh, NC 27615
Brent.Ciliano@FirstCitizens.com | 919-716-2650
Phillip Neuhart SVP, Director of Market and Economic Research
Capital Management Group | First Citizens Bank
8510 Colonnade Center Drive | Raleigh, NC 27615
Phillip.Neuhart@FirstCitizens.com | 919-716-2403
Blake Taylor | Market & Economic Research Analyst
Capital Management Group | First Citizens Bank
8510 Colonnade Center Drive | Raleigh, NC 27615
Blake.Taylor@FirstCitizens.com
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