What will impact US markets this week? 5 factors to watch
US stock futures surged on Monday, signaling a potential rebound from recent losses as investors assessed the impact of President Trump’s trade overhaul on Nvidia (NVDA) ahead of its upcoming earnings report. Futures tied to the Dow Jones Industrial Average rose 0.8%, recovering from its worst week since October. Meanwhile, S&P 500 futures gained 0.5%, and the tech-heavy Nasdaq 100 edged up 0.4%.
The positive momentum comes after Friday’s sharp declines, which capped a losing week fueled by growing concerns among American consumers and businesses over Trump’s proposed tariffs.
As a new week has started, several key events and economic data releases are expected to shape market sentiment. Here are five major factors investors will be keeping an eye on:
1. Earnings Reports: Nvidia takes Center Stage
As per Yahoo Finance report, earnings season continues, and all eyes will be on Nvidia (NVDA), which is scheduled to report its quarterly results after the bell on Wednesday. As a leader in the AI space, Nvidia’s performance and outlook could provide critical insight into the tech sector’s growth prospects. Analysts are expecting the company to report adjusted earnings per share (EPS) of $0.84, a 63% increase from the same period last year. Additionally, revenue is forecasted to reach $38.26 billion, a 73% rise year-over-year. Investors will closely monitor CEO Jensen Huang’s commentary, especially regarding AI chip demand and any potential competition from China’s DeepSeek.
Other major companies reporting this week include Home Depot (HD), Lowe’s (LOW), and Salesforce (CRM), whose results will provide a snapshot of consumer spending and the broader economy.
2. PCE Inflation Data: A Critical Indicator for the Fed
A key focus for markets this week will be the release of the core Personal Consumption Expenditures (PCE) index on Friday. The PCE is the Federal Reserve’s preferred inflation gauge, and this data will be scrutinized for clues on the central bank’s next steps. Economists expect the annual core PCE to rise by 2.6% in January, down slightly from 2.7% in December. On a monthly basis, core PCE is anticipated to increase by 0.3%, slightly higher than the 0.2% rise seen in December.
The PCE’s figures will be crucial in shaping expectations for the Fed’s next move. With inflation still above the Fed’s target, markets are betting that the central bank will hold off on rate cuts during the first half of 2025, especially as the labor market remains strong. Analysts at Morgan Stanley believe that a 2.6% rise in core PCE for January could lead to a potential rate cut of 0.25% in June.
3. GDP Data: Revising Q4 Growth
The report also stated that the second estimate for the fourth-quarter GDP will be released this week, offering an updated picture of the US economy’s performance. While the initial estimate showed a solid 3.2% annualized growth rate, the revised data could bring new insights into consumer spending, business investment, and trade.
A stronger-than-expected GDP reading would likely be seen as a positive signal for the economy and could help alleviate concerns about a potential slowdown.
4. Consumer Confidence: The State of the US Household
Consumer confidence will also be under the spotlight this week, with data expected to be released on Tuesday. With inflation still above target and interest rates on the rise, the sentiment of American consumers will be closely watched. Consumer confidence has been a critical barometer for spending, and a decline could signal a slowdown in retail activity, which in turn could impact growth prospects for key sectors like consumer discretionary and retail.
5. Housing Market Data: Home Prices and Sales Trends
According to Yahoo Finance, Investors will also be looking at updates on the housing market as data on home prices and sales are set to be released. The housing market has faced headwinds in recent months due to higher mortgage rates, but any signs of stabilization or an uptick in activity could help to reassure investors about the broader economic recovery.