TLDR
- Federal Reserve expected to keep interest rates unchanged at 4.25% to 4.5% this week, with Powell’s remarks and economic projections in focus
- Nvidia CEO Jensen Huang will deliver keynote at GTC conference Tuesday amid tech stock challenges
- Nike, Micron Technology, FedEx and other companies will report earnings this week
- Key economic data releases include retail sales, housing market indicators, and existing home sales
- Stock market experienced fourth consecutive weekly decline, with S&P 500 dropping 2.5% last week
The coming week promises to be busy for markets with a Federal Reserve interest rate decision, Nvidia’s annual developer conference, and earnings reports from major companies including Nike and FedEx.
The Federal Reserve is expected to maintain current interest rates when it concludes its two-day meeting on Wednesday. This would mark the second straight meeting with no rate change after the Fed reduced rates by a full percentage point over the final three meetings of 2024.
Market participants have priced in almost 100% certainty that the Federal Open Market Committee (FOMC) will keep rates at current levels of 4.25% to 4.5%. This prediction comes from the CME Group’s FedWatch tool, which tracks market expectations for Fed policy.
The Fed’s report will include quarterly economic projections. The report features the “dot plot” that shows where Fed officials expect interest rates to go. These projections are closely watched by investors looking for hints about future policy.
After the decision announcement, Fed Chair Jerome Powell will take questions from the media. His comments on rates and economic policies could move markets. Investors will be looking for clues about the timing of possible future rate cuts.
Retail Sales
February retail sales data arrives on Monday. This comes as worries about consumer spending grow after a sharp decline in January. Consumer confidence has also dropped over fears about new tariffs and their potential impact on prices.
Several housing market reports are scheduled for this week. The homebuilder confidence report comes out Monday as concerns rise about how steel and aluminum tariffs might increase construction costs.
Housing data
Tuesday brings data on housing starts, giving insights into February building activity. Thursday’s report on existing home sales will show if home buying remained slow last month. The real estate industry hopes spring will bring more activity to a housing market that has struggled with high prices and limited inventory.
Nvidia CEO Jensen Huang will deliver the keynote address at the company’s GPU Technology Conference (GTC) on Tuesday. His remarks come at 1 p.m. ET as the chipmaker faces market pressure during a tech stock sell-off. Nvidia also faces challenges from Chinese AI technology like DeepSeek.
Key Earnings Reports
Micron Technology, an Nvidia partner, reports earnings Thursday. The memory chip maker recently lowered its revenue projections below analyst estimates. The company cited a weak PC replacement cycle and slower demand from auto and industrial sectors.
Nike is set to report quarterly results on Thursday. This comes after the company reported better-than-expected results in new CEO Elliott Hill’s first quarter leading the global fashion brand.
FedEx will also report on Thursday. The shipping company announced plans late last year to spin off its freight business into a separate public company. In its most recent report, FedEx lowered its full-year outlook to project flat year-over-year revenue growth due to expected weaker consumer demand.
Several retailers and restaurants will report earnings. Discount retailers Ollie’s Bargain Outlet and Five Below release earnings Wednesday. Darden Restaurants, parent company of Olive Garden, reports Thursday. General Mills reports Wednesday, which could offer insights on consumer food spending trends.
Stock market struggling despite positive news
The stock market has been struggling recently. The S&P 500 dropped 2.5% last week, marking its fourth straight weekly decline. The Nasdaq Composite fell 2.9% while the Dow Jones Industrial Average tumbled 3.4%.
Even positive news failed to lift markets. The S&P 500 attempted to rally Wednesday after February’s consumer price index showed inflation at 2.8%, down from January’s 3%. Lower inflation should help the Fed cut rates, but investors didn’t respond positively.
Market concerns seem to center on President Trump’s tariff policies. These tariffs could push prices higher and reduce consumer spending. The uncertainty around the policies is causing even more worry.
This uncertainty shows in economic data. The U.S. NFIB Small Business Optimism Index dropped for a second straight month in February. The University of Michigan’s consumer sentiment index fell below expectations, with even Republicans feeling less confident.
Sentiment has turned bearish
Investor sentiment has turned strongly bearish. The American Association of Individual Investors survey showed bearish responses just over 60%, near the highest level in over a year. This is one of the most pessimistic results in history, just 10 points below the record high during the 2008-09 financial crisis.
However, such extreme pessimism often signals a potential turning point. History suggests the S&P 500 gains 13.6% on average over the following 12 months after bearish sentiment reaches current levels.
Despite Friday’s market rally, analysts warn the S&P 500 could still drop to around 5400, about 3% below current levels. This suggests investors might consider gradually putting cash into the market while keeping some reserve in case selling continues.
The market has followed a pattern in recent weeksâdropping to start the week, then rallying to end it. If stocks can hold onto Friday’s gains as the new week begins, it might signal that the worst is over, at least for now.
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