Wall Street rebounded on Friday, but still had a losing week. Questions surrounding Federal Reserve interest rate cuts and rising geopolitical tensions have dominated trading and will continue to be key themes to watch. The good jobs news – strong hiring last month with high but moderate wage inflation – was treated as such on Friday. But weakness earlier in the week, including Thursday’s major reversal following a surge in oil prices, proved too much to overcome in a single session. The Dow Jones Industrial Average, S&P 500 and Nasdaq all finished lower for the week. The American oil benchmark, West Texas Intermediate crude, jumped 4.5% over the week. Supply concerns sparked by escalating conflicts in the Middle East and Ukraine, coupled with U.S. economic resilience, have resulted in rising energy prices, a development we continue to see to watch given the impact of rising oil on almost every business in the United States and the United States. P 500, as well as the businesses and consumers these businesses rely on for their sales and therefore their profits. In the coming week, we will receive two key inflation reports that could influence the odds on when the Fed could begin cutting rates and when the first quarter earnings season begins with two names of Club. Consumer Prices: The main report to watch for markets will be the March Consumer Price Index (CPI). released Wednesday before the opening bell. As the Fed cuts its rate forecast for this year to three or less, from six at the start of 2024, CPI will come under particular scrutiny. Friday’s strong jobs report dropped the odds of a June decline to around 50/50. The housing component of the CPI – large, unavoidable costs for American consumers – has been a persistent source of inflation, keeping the overall index high. On Friday, economists expected a 3.4% year-on-year increase in the overall CPI and a 3.7% year-on-year increase in the core CPI, which excludes volatility in food prices and energy. Producer prices: The March producer price index (PPI) is released on Thursday. The CPI carries more weight because it reflects the prices consumers pay, which is the Fed’s main concern. However, the PPI is important because it provides insight into input costs. A larger-than-expected rise in input costs could indicate price hikes on the horizon as companies seek to protect profits by passing on higher costs to consumers. This would have a negative effect on reducing the inflation rate and reinforce the idea that we simply don’t need rate cuts right now. On Friday, economists expected a 2.3% year-on-year increase in headline and core PPI figures. Club Earnings: Two club names will report quarterly results next week: Constellation Brands before the bell Thursday and Wells Fargo Friday morning. For Constellation, maker of Modelo and Corona, it all depends on the dynamics of beer sales. In our review of the portfolio’s top five stocks from February’s monthly meeting through last week’s March meeting, we highlighted Nielsen data showing improving beer sales trends, with Constellation gaining share of walk. That said, it is important to remember that the first months of the quarter were penalized by bad weather. In addition to the results, we’ll look at what management says about the pace of beer sales from month to month. Wine sales have been weak. But we know it. So, when it comes to wine – and spirits, which are part of the overall category – we will listen to whatever management can provide us regarding plans to turn things around and/or perhaps divest. Jim Cramer has been arguing for some time now that Constellation should shed its wine and spirits portfolio and devote all its energy to beer. Concerning Wells Fargo, management reaffirmed its forecasts for the full year at the end of February at the UBS Financial Services Forum. That said, these directions could well demonstrate conservatism. In the fourth quarter 2023 release, we learned that management is forecasting five rate cuts from the Fed to determine its outlook. As noted in our analysis at the time, “lower rates mean less money for traditional lenders like Wells Fargo. If we get fewer discounts, Wells Fargo could see a higher NII than management projects.” . With the market now only expecting three cuts, with even lower chances if inflation remains above the Fed’s 2% target and the economy continues to hold up, we wouldn’t be surprised to see the NII (net interest income) forecasts will be revised upwards at some point. (Our other financial stock, Morgan Stanley, reports results on April 16.) Here’s a look at all the upcoming earnings and economic numbers as we consider further moves in the portfolio after three trade scares this week. Tuesday, April 9 Before the bell: Tilray (TLRY), Neogen (NEOG) After the bell: WD-40 (WDFC), PriceSmart (PSMT), SMART Global (SGH) Wednesday, April 10 8:30 a.m. ET: Consumer Price Index Before the Bell: Delta Air Lines (DAL) After the Bell: Rent the Runway (RENT) Thursday, April 11 8:30 a.m. ET: Producer Price Index 8:30 a.m. ET: First Employment Insurance Claims Before the Bell: Constellation Brands (STZ), CarMax (KMX), Fastenal (FAST) Friday, April 12 Before the bell: Wells Fargo (WFC), JPMorgan Chase (JPM), BlackRock (BLK), Citigroup (C), Progressive (PGR), State Street ( STT ) (See here for a complete list of Jim Cramer’s Charitable Trust stocks.) As a subscriber to CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after a trade alert is sent before buying or selling a stock in his charity’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after the trade alert is issued before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, AS WELL AS OUR DISCLAIMER. NO OBLIGATION OR FIDUCIARY OBLIGATION EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
Traders work on the trading floor of the New York Stock Exchange (NYSE) in New York, the United States, April 5, 2024.
Andrew Kelly | Reuters
Wall Street rebounded on Friday, but still had a losing week. Questions surrounding Federal Reserve interest rate cuts and rising geopolitical tensions have dominated trading and will continue to be key themes to watch.
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