Inflation Data, Recession Fears Highlight Tumultuous Week

The FOMC's meeting minutes suggest a recession is coming

Digital Content Manager
Apr 14, 2023 at 2:17 PM
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Despite starting off on a quiet note, this past week heated up after investors got to unpack highly anticipated inflation indicators. Stocks moved on both sides of the aisle, after a lighter-than-expected March inflation report, but the Dow Jones Industrial Average (DJI) snapped its four-day win streak after the Federal Open Market Committee's (FOMC) meeting minutes suggested the recent banking crisis is likely to push the U.S. into a recession later this year.

A better-than-expected producer price index (PPI) reading for March and a Big Tech rally brought tailwinds to Wall Street, however. Both the S&P 500 Index (SPX) and Nasdaq Composite Index (IXIC) scored their highest closes since February, while the DJI saw a triple-digit win. Stocks cooled after the unofficial start of the earnings season, but the DJI and SPX were still eyeing weekly gains at the time of this writing.

Bank Stocks Back in the Spotlight

Investors kept a close eye on the banking sector. Options traders are seemingly buying the dip on PacWest (PACW), while put traders cashed in on Charles Schwab (SCHW). Blue chip JPMorgan Chase (JPM) and Wells Fargo (WFC) were in focus as well, ahead of their first-quarter earnings reports. Citigroup (C), meanwhile, announced a quarterly earnings and revenue beat.

This Week in Tech

Over in the fintech space, Block (SQ) attracted a downgrade to "market perform," and a bearish trendline threatened PayPal (PYPL) stock. Stifel upgradedNetApp (NTAP) drew an upgrade to "buy," and Baird initiated bullish coverage on online dating app Bumble (BMBL). In addition, Morgan Stanley said MongoDB (MDB) could  "pivot to profitability,"  and chipmaker Micron Technology (MU) popped after Samsung Electronics lowered semiconductor production

Brace for Manufacturing, Services Data

Next week brings the S&P flash U.S. services and manufacturing purchasing managers' indexes (PMI), as well as the Federal Reserve's Beige Book. The earnings season will pick up with quarterly reports to come from AT&T (T), Bank of America (BAC) Goldman Sachs Sachs (GS), Johnson & Johnson (JNJ), Lockheed Martin (LMT), Netflix (NFLX), Procter & Gamble (PG), and United Airlines (UAL). Keep tabs on these support and resistance levels for the SPX moving forward, and understand why the yield curve inversion is a bad sign for stocks.

 

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