Weekly Market Outlook

[Screen shows “Weekly Market Outlook with Jeffrey Kleintop”]

[Jeff holds up illustration of a figure lounging in a hammock between two palm trees]

From earnings pre-announcements, to the latest data on employment and factories, and meetings on interest rates at the Fed and Bank of England, I’m Jeff Kleintop and here’s 90 seconds on what you need to know for the week ahead.

The stock market has taken the latest inflation data, higher oil prices and the UAW strikes in stride: stocks have had the 2nd longest stretch without a 2% daily move in more than 15 years. In fact, last week the VIX volatility index hit the lowest level since before the pandemic. So what might shake the market out of its quiet mood? The earnings pre-announcement period starts this week when companies who are not on track to meet their quarterly targets often let investors know the bad news. With the global service sector deteriorating sharply during the quarter there could be some bad news from this formerly healthy sector of the economy. Airlines are an example. Last week, American cut its third quarter guidance because of higher fuel prices and Spirit warned about steep discounts for travel as consumers face higher gasoline prices and the resumption of student loan payments. Airlines’ loss of altitude may offer a hint to as to what this week may hold for consumer businesses and companies with oil as a big cost.

On Wednesday, we expect the Fed to hold rates at 5.5%.

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More consequential will be what clues it offers on the future rate path. Positive economic surprises since the last meeting will likely lead officials to sharply revise up their GDP growth forecasts.

And the Bank of England is set to lift interest rates

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by 25bps to 5.5% on Thursday, possibly the last move. The strength of pay growth is likely to be cited as the main reason for the move, but UK policymakers appear increasingly confident that rates are close to peaking and the economy is now flirting with recession.

Thursday’s initial claims

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for unemployment benefits in the U.S. will reveal if they continue to trend lower in the third quarter, suggesting resilience in the job market this summer after they rose in the first half of the year.

And Friday’s Purchasing Managers’ Index

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for the US, Germany, France, Japan, Australia and the United Kingdom will give the first read on manufacturing activity in September—the last reading in August surprised with a slight improvement.

[Jeff holds up a note with the words “Thank you”]

Thanks for watching.

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