U.S. stocks were on the rise on Monday, marking the start of a relatively calm week for economic data. According to BofA Global Research, the stock market tends to perform better during weeks with a quiet macroeconomic calendar, based on historical data.
According to a note by a team of strategists at BofA Global Research, the S&P 500 index has shown a 0.6% increase during weeks without any significant macroeconomic data releases. In comparison, other weeks have seen a 0.2% increase on a median basis. According to the data, quiet weeks have consistently generated positive returns over the past 10 years on a median basis (see chart below).
“This week, we have a few Fed speakers and the Senior Loan Officer Opinion Survey (SLOOS), but it’s a relatively quiet week for macro releases,” the BofA strategists wrote. “But after a busy week last week, the market will have a lot to digest. We are now past uncertainty of the Fed, jobs report and earnings, all of which were net positive for stocks last week.”
The second quarter of 2024 has seen significant volatility in U.S. stocks. In April, the three benchmark stock indexes experienced a significant decline due to concerns about inflation and its potential impact on the Federal Reserve’s interest-rate cuts. As a result, the 10-year and 30-year Treasury yields reached their highest levels since November.
However, markets then stabilized last week as Chair Jerome Powell reassured Wall Street that a rate hike is unlikely to be the central bank’s next move. Additionally, a cooler-than-expected April jobs report raised hopes that policymakers may soon begin cutting interest rates.
According to Dow Jones Market Data, the S&P 500 and the Nasdaq Composite COMP have experienced a three-day streak of gains, marking their most significant point and percentage increases since November 14. The Dow Jones Industrial Average DJIA experienced gains for four consecutive trading days. According to Dow Jones Market Data, the blue-chip index was on track to achieve its largest four-day point and percentage advance since March.
In the coming week, investors will have the opportunity to gain insights into the future actions of the Federal Reserve through speeches by Richmond Fed President Tom Barkin, New York Fed President John Williams, and Minneapolis Fed President Neel Kashkari. Although there is a lack of significant macroeconomic data, these speeches may provide valuable information for investors.
Later this week, Fed Vice Chair Philip Jefferson, Boston Fed President Susan Collins, and Chicago Fed President Austan Goolsbee, along with other Fed officials, will be making appearances.
“Fed speak this week should help determine whether Powell’s dovish comments at the FOMC reflect the broader committee view,” a team of Citigroup economists led by Andrew Hollenhorst, said in a Monday client note. “We expect they do — including his [Powell’s] emphasis on the employment mandate and his view that rate hikes are unlikely.”
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The comments from NY Fed President Williams are expected to provide valuable insights, given his position as the Vice Chair of the policy setting committee and his reputation as a centrist. Citigroup economists believe that his remarks will be particularly influential. In a previous response to a question before the FOMC blackout period in April, Williams mentioned the possibility of a rate hike if conditions called for it. However, it is anticipated that he will take the opportunity on Monday to align his views with Chairman Powell’s stance that a rate cut is highly probable.
Williams will be giving a presentation on Monday at 1 p.m. Eastern time.
The peak of corporate earnings season has already passed, with 80% of the companies in the S&P 500 index having reported their financial results for the first quarter. However, there are still 56 companies in the large-cap index that are scheduled to report this week, according to FactSet.
Financial results are expected to be released by The Walt Disney Co., Uber Technologies Inc., Occidental Petroleum, Rivian Automotive, and other companies.
