The observance of Good Friday will make for a short but action-packed week ahead, as traders sort through new inflation data, the latest from the
and ever-gyrating oil prices.
The release of February's producer price index seems likely to jump-start Tuesday's trading, considering what kind of ruckus the PPI numbers stirred up last time around. A higher-than-expected core PPI for January sent the markets reeling, pushing the yield on the benchmark 10-year Treasury up 9 basis points in a single day. The 10-year yield has moved up over 25 basis points to 4.5% since then amid rising inflationary fears.
Back then, the PPI rose 0.3%. But excluding food and energy, prices jumped 0.8%, marking the biggest gain in six years. This time, the core PPI is expected to rise 0.1% for the month, while the overall PPI is expected to rise 0.3%, in line with last period.
Inflation will be the driving topic again on Wednesday morning, as consumer price index data are due to be reported for February. Street estimates call for an increase of 0.3%, up from 0.1% last month.
"Any major surprise in the CPI or PPI will be a major negative for both stocks and bonds," says Paul Mendelsohn, strategist at Windham Financial. "And these numbers should be really interesting, since they take into account the recent run-up in oil."
The PPI and CPI data should offer investors some insight as to whether a spike in inflation will force the Fed to veer off its strategy of so-called measured rate increases and speed up the pace of its hike. Wednesday afternoon, the Fed will announce its latest policy decision. Mendelsohn, like most analysts, expects the Fed to raise rates by a quarter-point to 2.75%, its seventh straight quarter-point boost.
Oil will also continue to be a concern for investors, now that the price of crude has jumped over 20% this year. Lipper strategist Andrew Clark says oil's continued ascent could stifle equity returns not just in the short term but also further out on the calendar as late-month contracts are bid up.
"What this is signaling to the market is that there is going to be a higher return on energy investments over the next few years and a lower return elsewhere in the market with all else being equal," says Clark.
As evidenced by the massive profit warning by
last week, which dropped the
more than 1%, earnings season has now given way to warning season. But a few notable names will still be offering reports that could move the market.
will offer its first-quarter numbers. Street estimates for the company's earnings are $2.57, up 46% from last year.
KB's results and guidance should also shed some light on the strength of the much-watched homebuilding sector and how it will fare in the new rising rate environment. KB's shares are down more than 9% from the one-year highs reached late in February, a fall that mirrors the decline in the Philadelphia Housing Index.
steps up to the plate Tuesday with its third-quarter results. Wall Street analysts forecast the Redwood Shores, Calif., software giant to report earnings of 15 cents a share on revenue of $3.08 billion, up from 12 cents and $2.51 billion, respectively, in the comparable quarter a year ago. Oracle is currently in a bidding war with Germany's
for software maker
British soccer fans can also check out
earnings on Tuesday, perhaps to see why American billionaire Malcom Glazer is so intent on buying the New York Yankees of soccer.
All eyes may be on the Fed on Wednesday, but traders may want to take a glance at
results as well. The oil driller's shares are up 45% this year, piggybacking on the rapid rise in oil prices.
Equity markets are closed Friday.