New York, NY – The stock market continues to reach new record highs with the S&P 500 and Nasdaq ending the last week at their highest levels ever. The S&P 500 has seen an increase for 16 out of the last 18 weeks, a feat not achieved since 1971, according to research from Deutsche Bank.
This week, investors will closely watch Federal Reserve Chair Jerome Powell’s testimony on Capitol Hill and the release of the February jobs report to gauge the stock market’s momentum. Additionally, updates on economic activity in the services sector and job openings are scheduled.
As the majority of the S&P 500 has finished reporting earnings, investors are anticipating corporate results from major consumer-facing brands like Target, Costco, and Kroger in the coming week.
Federal Reserve Chair Jerome Powell is expected to deliver his semi-annual monetary policy testimony to the House and Senate starting on Wednesday. This testimony will provide insights into the state of the US economy, efforts to combat inflation, and potential interest rate cuts by the central bank.
Markets are predicting the Fed to cut interest rates three times this year, with the first cut potentially in June. Recent commentary from Chair Powell and projections from the Fed itself support this expectation. The Federal Open Market Committee is set to announce its latest policy decision and economic projections on March 20.
Regarding the labor market, Wall Street economists emphasize the importance of job market resilience in preventing a recession amidst slowing inflation. New job data to be released this week will include updates on wages and job openings, with the highlight being the February jobs report expected on Friday.
Earnings season is winding down, with 97% of the S&P 500 having reported earnings for the fourth quarter. Data from FactSet projects a 4% earnings growth in the fourth quarter compared to the same period last year, marking the second consecutive quarter of growth for the index.
Analysts note that the outlook for earnings growth in the current quarter is holding steady, with estimates not declining as much as usual. This stability in earnings growth forecasts contributes to the positive sentiment surrounding stock market performance.
As history suggests, stocks are likely to continue their upward trajectory. Research shows that a positive start to the year for the S&P 500 in January and February has historically resulted in strong performance over the following 12 months.
With a robust economic calendar and key earnings releases scheduled for the week, investors will keep a close eye on market developments to navigate the ongoing record-setting rally in the stock market.