The focal point for Wall Street in the coming week, specifically on Tuesday – will be the Federal Reserves policy meeting.
The obvious question leading up to Tuesday’s interest rate decision is if the Fed Funds Rates have found a bottom.
The Fed is widely expected to make a small rate cut of .25/bsp but at the same time could signal a possible pause to assess the impact of a series of cuts and other stimulus for the US economy. Let’s not forget that the FOMC has sliced an unprecedented 300 basis points off the FFR since their September 18, ’07 monetary policy meeting.
The market may also get a clearer picture of economic momentum with the first estimate of gross domestic product (GDP) for the first quarter, and data on payrolls for April, as well as personal income and spending.
This past week, the earnings and economic data gave a strong boost to the stock market with March retail sales and the industrial production posting positive results. The March leading indicator index was up as well. Additionally, the earnings data reflected the untold story of strength in manufacturing and exports, undermining recession alarmism and making it clear that the stock market is well along its route to recovery.
Based on market internals and the fact the selling pressure is drying up in the bank shares, it is quite clear the market is positioning itself for an upside move out of the current trading range.
The Dow Jones Industrial Average edged up this past week to over 0.30% printing 12,891.86. The Standard & Poor’s 500 broad-market index added more than 0.52% to 1,397.84 and the technology-heavy Nasdaq composite climbed 0.83% to 2,422.93.
In the coming week, the market will also get more economic data, such as: monthly reports on auto sales as well as a large number of earnings reports from Visa, GM, Procter & Gamble, Exxonmobil and Chevron.