Stock market – A look into next week

Stock bears are pointing to disappointing earnings from Intel with revenue down -28% and Hasbro announcing they are cutting 15% of their workforce.

Earnings highlights today include American Express, Chevron, Colgate Palmolive, and Roper Technologies.

Economy

On the data front, all eyes are on the PCE Prices Index with Wall Street expecting a drop in the annual headline rate to +5.0% from +5.5% previously. The so-called core rate (strips out food and energy), which is one of the Fed's preferred inflation gauges, is expected to slide to +4.4% from a previous +4.7%.

It's worth noting that data yesterday showed the US economy grew at an annualized rate of +2.9% in Q4, according to the first estimate of Gross Domestic Product (GDP). Bulls view the headline number as an indication that the economy may not be as close to the edge as some had feared. Bulls are also happy about the slight growth slowdown to +2.9% from +3.2% in Q3, as slower growth is exactly what the US Federal Reserve is trying to accomplish.

Bears, however, warn that the better-than-expected results are a backward-looking gauge and that growth has taken a deeper dive so far in 2023. Most bears expect GDP in the first two quarters will turn negative, pointing to consecutive monthly declines in residential construction, industrial production, manufacturing activity, and retail sales.

Investors may turn a bit more cautious as we head into next week with a slew of potential catalysts, including the Federal Reserve policy meeting and earnings results from the world's biggest companies.

The Fed's interest rate decision will come at the end of the two-day meeting on January 31-February 1. Traders currently give a 25-basis point hike a more than 98% chance versus less than 2% for a 50-basis point hike, according to the CME FedWatch Tool.

Data to watch

Other key data next week includes the Employment Cost Index, the S&P Case-Shiller Home Price Index, and Consumer Confidence on Tuesday; ADP's Employment Change, ISM Manufacturing, Job Openings and Labor Turnover Survey (JOLTS), and Construction Spending on Wednesday; Productivity and Labor Costs and Factory Orders on Thursday; and the January Employment Situation and ISM Non-Manufacturing on Friday.

Earnings next week heat up substantially with the top highlights being Meta on Wednesday, followed by Alphabet, Amazon, and Apple on Thursday.

Other highlights include GE HealthCare, NXP Semiconductors, and Whirlpool on Monday; Advanced Micro Devices, Amgen, Canadian Pacific, Caterpillar, Chubb, Corning, Edwards Lifesciences, Electronic Arts, Exxon, General Motors, Marathon Petroleum, McDonald's, Moody's, Pfizer, Phillips 66, Snap, Spotify, StrykerUPS, and UBS on Tuesday; Allstate, Altria, Boston Scientific, Corteva, Humana, Johnson Controls,  MetLife, Novo Nordisk, Novartis, Suncor, and TMobile on Wednesday; Bristol Myers Squibb, CNH, ConocoPhillips, Deckers Outdoor, Eli Lilly, Ferrari, Gilead Sciences, Harley Davidson, The Hartford, Hershey, Honeywell, Merck & Co., Qualcomm, Shell, Skechers, SnapOn, Stanley Black & Decker, Starbucks, and Trane on Thursday; Cigna, Regeneron, and Sanofi on Friday.