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Markets Wait for FOMC Meeting and Major Earnings This Week

·3 min read

Pre-market futures are flat-to-down to start another week of trading. It’s been five weeks of losses for the Dow and four for the S&P 500 and Nasdaq. The tech-heavy Nasdaq dropped more than -13% alone in April — -4.2% on Friday alone — certifying the bear-market tangent ahead of this week’s Fed policy announcement.As everyone surely knows by now, the Federal Open Market Committee (FOMC) is widely expected to raise interest rates by 50 basis points (bps), adding to the 25 bps the Fed enacted at its last meeting in mid-March. It feels like a long time between Fed meetings, largely because of this bearish sentiment fully baking-in this rate increase.

The optimists among us may point to that March FOMC meeting, ahead of which bearish market sentiment had crept in and sent indices lower — only to spring-load ahead to the first (and so far only) positive trading month so far in 2022. Once the Fed pulls the band-aid off — and erases question marks pertaining to the draining of the multi-trillion-dollar balance sheet — perhaps we’ll see a relief rally like we saw seven weeks ago.

We’ll also get big monthly jobs numbers this week: both the private-sector ADP (ADP) payrolls on Wednesday and the U.S. government’s non-farm payroll report Friday will bring us the latest update on this robust — but growing ever tighter — labor force in the U.S. Of particular note will be average wage increases month over month and year over year; it’s metrics like these which illustrate how well employed Americans are competing with inflation rates.

After the opening bell this morning, we’ll see new data on both PMI and ISM Manufacturing for April, as well as Construction Spending for March. These reports will point to the productivity aspect of the economy; generally speaking, they are expected to perform at least as well as the previous month. Again, we’ll then have to compute how this productivity matches up with inflation metrics we’ll be seeing in other reports.

Ahead of Monday’s open, ON Semiconductor ON beat estimates on both top and bottom lines: earnings of $1.22 per share outpaced the $1.05 in the Zacks consensus — which itself marked +200% growth from the year-ago quarter. Revenues of $1.95 billion in the quarter surpassed the $1.91 billion analysts were expecting. Guidance was also good: the low-end of the new Q2 company estimates for earnings and sales are markedly better than current consensus. Expect analyst revisions to move upward; shares re +3.8% in today’s pre-market.

After today’s closing bell, we’ll see a cavalcade of new earnings reports: Expedia EXPE, Transocean RIG, Clorox CLX and Mosaic MOS, to name just a few. This is the heaviest week of Q1 earnings reports, even as many high-profile companies and sectors have already reported. These will also provide more information to the Fed and market participants as we continue to hack our way through the jungle back toward positive sentiment.


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Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
 
Transocean Ltd. (RIG) : Free Stock Analysis Report
 
Expedia Group, Inc. (EXPE) : Free Stock Analysis Report
 
The Clorox Company (CLX) : Free Stock Analysis Report
 
The Mosaic Company (MOS) : Free Stock Analysis Report
 
ON Semiconductor Corporation (ON) : Free Stock Analysis Report
 
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