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Last week was a crazy week for stocks, wasn’t it?
Major stock indexes posted their worst daily losses on Tuesday since September 2022 when the Federal Reserve dramatically raised interest rates.
After that, the markets recovered most – if not all – of their losses by the end of the week.
In fact, the Nasdaq 100 ended the week up 0.4%. The S&P 500 fell 2.4 points. The Dow Jones Industrial Average fell 0.6%, while the Nasdaq Composite dropped 0.6%.
It’s been that kind of week.
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The reasons for the drama last week were:
- Overbought stocks, especially technology stocks.
- Disturbances in Japanese markets.
- Tensions are rising over the US presidential election.
- Growing fears of a war between Israel and Iran.
- The ongoing war between Ukraine and Russia helped fuel inflation in 2021 and 2022.
This week is likely to see more volatility due to several important economic and earnings reports. Meanwhile, speculation will increase around the August 28 report from chip giant Nvidia. (NVDA program) .
Meanwhile, talk will intensify this week about when or whether the Federal Reserve will cut interest rates. On August 22-24, most of the world’s central bankers will gather in Jackson Hole, Wyoming, for an annual conference. Fed Chairman Jerome Powell will speak at the meeting and could offer some hints about interest rates.
But it is not yet clear whether the fluctuations will be as large as those that rocked global markets last week.
One indicator to watch is what happens to the CBOE Volatility Index, also known as the VIX and sometimes called the fear index.
The VIX measures money flows from investors trying to protect themselves from crazy volatility.
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For most of the year, the Volatility Index (VIX) was at 12 to 14, meaning there was little concern among investors that the markets might suddenly lose control of themselves.
But once tech stocks and markets started to fall, investor fears exploded, and the volatility index levels spiked. Going above 30 is a concern, but the index was at nearly 66 on August 5, when the Dow was losing 1,000 points. The volatility index is now back at 20, but that’s still a bit high.
(You can find Quote about the VIX volatility index hereA number of ETFs track the Volatility Index (VIX), including the iPath Series B S&P 500 VIX Short-Term Futures ETN. (In XXXX) .)
So, here are the keys to what to watch this week.
First: Economic reports
Producer Price Index, due out Tuesday. This index measures changes in the prices of goods and services produced in July. In June, the Bureau of Labor Statistics reported that the index rose 2.6% on an annualized basis, with services providing the greatest pressure on prices. Estimates for the July report are for a 2.6% annual increase.
Consumer price index, due out on Wednesday. This measure of the prices consumers pay for all expenses is expected to remain roughly unchanged in July. The CPI hit a record high of 8.6% year-over-year in May 2022, helped by higher gasoline prices and higher rents. And prices have fallen dramatically. On Saturday, AAA’s daily report showed prices had fallen 6.2% since peaking at $3.679 a gallon on April 19.
Retail sales, due out Thursday from the Commerce Department. This is the report Wall Street is referring to. The consensus is for a 2% increase for July compared to July 2023. There may be some impact from lower gasoline prices, which have fallen since peaking in April. Lower gasoline prices mean more money to spend.
Housing starts, building permits and Michigan consumer confidence survey data are also due Friday. Housing starts are waiting for mortgage rates to fall. So don’t expect a big number. The University of Michigan Consumer Sentiment Survey tries to gauge consumer concerns. So keep an eye on that survey.
More economic analysis:
- 4 Reasons Why the Worst Isn’t Over for the Market
- Stock Market Today: Stocks Close Higher After Week of Volatility
- Mortgage rates hit lowest level since May 2023
Big Earnings Reports This Week
The second-quarter earnings season is in full swing with most of the big tech companies reporting their financial results. The one exception is NVDA, which is scheduled to report its financial results on August 28.
This week contains reports that can move the markets.
Home Depot Store (High resolution) The company is scheduled to report its financial results on Tuesday. The building-supplies company’s second-quarter earnings are expected to be $4.56 a share, down slightly from $4.65 a year ago. Home Depot caters to the do-it-yourself market. But its sales to builders and contractors are huge and have weighed on the results. The company’s shares have been flat this year, falling 5.3% in August.
Cisco Systems (CSO) due Wednesday. Earnings estimates: 70 cents a share, down from $1.01 a year ago. Cisco, a Dow Jones component, is struggling in the age of artificial intelligence. Reuters reported that the company will announce thousands of job cuts soon. Cisco announced 4,000 job cuts earlier this year. Shares fell 6.2% in August and 10% in 2024.
Walmart Limited (WMT) The retail giant is scheduled to report second-quarter earnings, with earnings expected to come in at 65 cents a share, compared with 61 cents a year ago. Walmart, which provides nearly everything to a broad range of customers, is still in business. After falling 1% in August, shares are expected to rise 29% in 2024.
Applied materials (huge) Due Thursday. The company makes and services chip-making equipment. Estimate: $2.01 per share, up from $1.90 a year ago. Shares have been on a rollercoaster ride among tech stocks since Nvidia’s peak. They fell 9.9% in August, after a 10.1% slide in July.
Derry and Company (to) due Thursday. The farm equipment maker is expected to report earnings of $5.85 a share, down from $10.20 a year ago. The reason: Corn prices have fallen 16% this year. Soybeans are down 22.8%. Wheat prices are down 13.6%. Deere shares are down 7% in August and 13.5% in 2024.
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