Geopolitics, Earnings and Other Key Themes to Watch this Week

Last week we saw some of the volatility from the prior weeks start to subside with the S&P 500 ($SPX) (SPY) finishing the week up just under a 0.5%. Even with some less-than-favorable news releases the markets seemed to be fairly resilient with Apple (AAPL) mostly leading the charge.

This week there are quite a few things to keep an eye on in the news and geopolitical realms. In addition to both of these, we have earnings starting back up with some bigger names in the financial sector reporting this week. Here are 5 things to watch in the market this week:

Earnings

It’s that time of the quarter again, earnings are back. Similar to last quarter it could prove to be very valuable to look past the top and bottom line numbers and listen to the forward guidance from the companies. Banks started to report last Friday and continue into this week with big names like Bank of America (BAC) and Goldman Sachs (GS) reporting on Tuesday, Morgan Stanley (MS) on Wednesday, and American Express (AXP) on Friday. 

The big financials could give some insight into where they think the rates are heading as well as some consumer spending habits. The latter is especially relevant to American Express. In addition to the banks, Tesla (TSLA) is out Wednesday after hours and Johnson and Johnson (JNJ) is out Tuesday before the open. Tesla could potentially move the entire market given how popular it is as a trading stock, so that is potentially something to be aware of holding through the close on Wednesday.

Geopolitical Conflict

Tensions have flared and conflict has broken out in the Middle East and this could have some far-reaching consequences outside of all of the human cost involved. This has already sparked a hot war and both the East and West seem hesitant to actually get involved. This is something to watch as a geopolitical event risk continues to rise against the markets. 

Empire State Manufacturing

Monday at 8:30 the Empire State Manufacturing is due out, and it has not been great as of late. This could produce some short-term volatility before the open, but it’s likely any volatility will have subsided by the bell. This is more of an economic indicator about the overall conditions of the economy and given last week's news releases, it's possible it's viewed with some additional scrutiny.

Building Permits

Due out Wednesday at 8:30 am are the US building permits which is a measure of new home starts for the month (annualized). Given the current housing situation in the US, this could be viewed as a possible bellwether as to the future of housing. If permits are up, the market could see a rally on the hopes that additional supply can bring housing costs down. If it's a miss it's possible we see the market sell off a bit in the possible thinking that the Fed will need to continue to raise rates to beat down housing costs.

Fed Speakers

Thursday looks to be a very busy day for the talking heads at the Fed. Powell is speaking at the Economic Club of New York and most of the time when he talks and gets asked questions it has a mildly market-moving effect. Later that day both Goolsbee and Harker are speaking as well so it is possible that Thursday could have some wild price action, especially taking into consideration that Tesla is releasing earnings the night before and that often moves the markets on its own. 

Best of luck this week and don’t forget to check out my daily options article.

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