Trade talks between the U. S.and China will dominate market focus in the week ahead, while investors are also watching to see whether other companies join the ranks of Apple and warn about an earnings miss.
Trade talks between the U. S.and China will dominate the market’s focus in the week ahead, while investors are also watching to see whether other companies join the ranks of Apple and warn about an earnings miss.
Fed Chairman Jerome Powell, who sent stocks sharply higher Friday, speaks again Thursday at an Economics Club of Washington D. C. luncheon. He is expected to deliver the same dovish message about flexibility when it comes to policy and patience when it comes to raising interest rates.
Apple blamed a revenue miss in big part on a sudden drop off in iPhone sales in China in November. The hit was seen as a sign that not only are trade tensions hitting China’s economy, but the U. S. economy and corporations could feel the pinch. Apple’s comments came the day before a stunning drop in ISM manufacturing data which also was blamed in part on trade friction.
«What the market needs next week and the week after is positive guidance from companies. What are companies telling us? What are their customers telling us?» said Quincy Krosby, chief market strategist at Prudential Financial. «If we could move from a stellar earnings to a more moderate earnings backdrop, the market will accept that but if guidance is weak and companies are lowering revenue growth, that will affect the market.»
The S&P 500 surged over 3.3 percent Friday to 2,531, and was up 1.7 percent for the week. The S&P was up more than 7.5 percent from its Dec. 24 low close.
China and the United States will hold vice ministerial level trade talks in Beijing on Monday and Tuesday and are expected to hold another round of meetings the following week.
«China is going to be absolutely the big thing,» said Julian Emanuel, chief equities and derivatives strategist at BTIG. China cut reserve requirements Friday to encourage more bank lending, its latest policy move aimed at ending a slowdown.
Economists expect U. S. growth to slow slightly, to the 2-2.5 percent range in the fist half but markets have been reacting to the prospect of an even slower economy. The ISM data for December was particularly discouraging because of a steep drop in new orders.
