July 10th, 2023

Market Faces Uncertainty as Earnings Season Soon Begins

Welcome to the first full week of trading in the third quarter of 2023. With earnings season around the corner and a spike in volatility last week from strong economic data, the market has been fighting for direction. While the first half of the year surprised many traders, the forecast hasn’t changed much.

Most are still expecting to see a substantial slowdown in the economy. Just don’t call it a recession. The Fed will likely raise interest rates two more times and the cost of growth will continue to weigh on companies.

With that as our backdrop, let’s take a look at which reports are likely to impact trading this week.

Although the Consumer Price Index hasn’t moved the markets as much as in the past, it’s still an important date to mark on your calendars.

Wednesday – 8:30 am EST – Consumer Price Index (CPI) – Many the year-over-year CPI number to remain at 4.0%, the same as last month’s reading. Core CPI which excludes food and energy is expected to remain flat as well, showing once again that inflation is sticky and may be leading to a period of stagflation.

Thursday – 8:30 am EST – Producer Price Index (PPI) – The PPI number isn’t likely to drop significantly from its previous reading of 0.2%. That is a positive for the economy as it helps keep inflation from coming back, but at the same time, it’s not doing enough to help reduce inflation or stagflation.

Thursday – 8:30 am EST – Unemployment Claims – Despite last week’s ADP jobs number being stronger than expected, the unemployment claims each week have been ticking higher on average. We haven’t seen the 260,000 range since the end of June, but the four-week moving average is still over 250k. The market is expecting 248k this week.

Friday – 10:00 am EST – U of M Consumer Sentiment – Often used as a gauge for future consumer spending, the University of Michigan’s Consumer Sentiment report is forecasted to show an uptick to a 64.4 reading from last month’s 63.9.

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Jeff Wood

Editor, Filthy Rich Dirt Poor
Coach, Options Testing Lab