Markets This Week, 01/01-01/05, 2024: Happy Beginnings

Economy and Markets: The Week Ahead

Stock markets finished the final trading day of 2023 on a minor note, declining slightly for the day in a razor-thin trading volume. However, the week was mostly positive for the markets, with the indexes wrapping up a robust nine-week rally as investors expect easier monetary policy in 2024.

The S&P 500 (SPX) rose 0.2% on the week, still trading at less than 1% below its January 2022 high. The benchmark index capped an impressive 24% annual gain, adding over $8 trillion to its overall capitalization. The blue-chip Dow Jones Industrial Average (DJIA), which lagged behind other indexes for most of the year, rose 0.5% on the week, logging a gain of almost 14% for the year. The technology benchmark Nasdaq Composite (NDAQ) was mostly unchanged for the week, which didn’t detract from its outstanding annual rally of 44.5%, fueled by the artificial intelligence (AI) boom and the generally strong positive sentiment towards tech stocks. The SPX and the DJIA logged their longest streak of weekly gains since 2004, while for the NDAQ it was the longest since 2019. The Nasdaq-100 (NDX) had its best year since 1999, surging almost 55%, led by the technology megacaps.

In this holiday-shortened week, investors’ attention will be split between the release of the reports reflecting trends in the U.S. labor market, alongside other economic data, and the Minutes from Federal Reserve’s last policy meeting, scheduled to be published on Wednesday. The minutes of the Federal Open Market Committee (FOMC) deliver a detailed report on the Federal Reserve’s stance on monetary policy, which is an outcome of their assessment of the risks to the long-run goals of price stability and sustainable economic growth.

The release of the FOMC Minutes is usually a very important market-moving event, where investors gain insight into the Fed members’ decision-making and receive some clues about the outline of its future policy. This time, it will be scrutinized even more than usual, as market participants will be looking for confirmation of the central bank’s pivot to easing monetary policy, as well as for hints regarding the timetable of the expected interest-rate cuts.

The nine-week rally in the stock markets was largely powered by the increasingly common belief that the Federal Reserve has done enough to quell the inflationary pressures. If the economic data points coming in the next weeks strengthen this assumption, then barring any unexpected events, the stock markets will likely continue their gains – at least, until the Q4 2023 earnings get weighed in, which for better or for worse will assuredly affect investor sentiment.

In this uncertain environment, investors are strongly advised to follow economic reports closely and to base their decisions on trustworthy data and analysis.

Upcoming Earnings and Dividend Announcements

The Q3 2023 reporting has ended, but some earnings reports are scheduled this week, coming from companies whose fiscal year is shaped differently.  

The most notable earnings reports this week will be published by Walgreens Boots Alliance (WBA), Conagra (CAG), Lamb Weston (LW), and Constellation Brands (STZ).

Companies’ reporting dates, consensus EPS forecasts, past data, analyst ratings, and price targets can be found on the TipRanks Earnings Calendar.

This week, Ex-Dividend dates are coming for Comcast (CMCSA), Cisco Systems (CSCO), Campbell Soup (CPB), JPMorgan Chase & Co. (JPM), American Express (AXP), Bristol-Myers Squibb (BMY), Owens Corning (OC), and other dividend-paying firms.

Companies’ Ex-Dividend and Dividend Payment dates, analyst ratings, and price targets can be found on the TipRanks Dividend Calendar.

Upcoming Economic Calendar Events

There are several important reports scheduled to be published in the next few days:

» December’s ISM Manufacturing PMI – Wednesday, 01/03 – This report, released by the Institute for Supply Management, shows business conditions in the U.S. manufacturing sector. It is a significant indicator of the overall economic conditions. PMIs are considered to be one of the most reliable leading indicators for assessing the state of the U.S. economy, helping analysts and economists to anticipate changing economic trends.

» December’s ISM Services PMI – Friday, 01/05 – This report, released by the Institute for Supply Management, shows business conditions in the U.S. services sector, which contributes almost 80% of the U.S. GDP. The ISM Services PMI is a forward-looking indicator, providing an important insight into the factors that influence GDP growth and inflation. PMI indices are leading economic indicators used by economists and analysts to gain timely insights into changing economic conditions since the direction and rate of change in the PMIs usually precede changes in the overall economy.

» December’s Nonfarm Payrolls and Unemployment Rate – Friday, 01/05 – The Nonfarm Payrolls and Unemployment reports, released by the U.S. Bureau of Labor Statistics, present the number of new jobs created during the previous month, and the percentage of people who were actively seeking employment during the previous month. These reports are considered two of the most important economic indicators, as policymakers follow the shift in the job numbers since they are strongly associated with the health of the economy as a whole. One of the Federal Reserve mandates is full employment, and it takes labor market changes into account when determining its policy decisions, which influence the capital markets.

Current and scheduled economic reports, Fed statements, and other releases, as well as analyses regarding their potential impact on the stock markets, can be found on the TipRanks Economic Calendar.