This week will be a busy one, with the Federal Reserve set to issue its latest decision on interest rates, the government due to release its monthly jobs report, and several big tech, pharmaceutical, and energy companies reporting earnings. While policymakers are widely expected hold their key interest rate steady on Wednesday, investors will likely be listening closely to comments from Fed Chair Jerome Powell for clues on the expected path of interest rates. The labor market will also come into focus this week with the release of job openings data, private payroll numbers, and the government’s monthly employment report, which will provide updates on the strength of the labor market. Several tech giants will report earnings throughout the week, with Microsoft (MSFT) and Alphabet (GOOGL) coming early in the week, followed by Apple (AAPL), Amazon (AMZN), and Meta (META) later in the week. Pharmaceutical firms Pfizer (PFE), Merck (MRK), and Novo Nordisk (NVO) are also scheduled to report as well, while ExxonMobil and Chevron will post their latest results on Friday.
Federal Reserve To Decide on Interest Rates
This week’s meeting of the Fed’s Federal Open Market Committee isn’t expected to produce a change in the Fed’s target rate range of 5.25% to 5.5%. But how Fed Chair Jerome Powell talks about the meeting afterwards could have an impact on markets. Powell’s comments after the Dec. 12 meeting gave investors hope that the Fed would begin cutting interest rates in 2024. But following those comments, some Fed officials have raised questions about the timing of cuts, and minutes from the December meeting showed there was still division among members on interest rates. Investors will also be listening closely to Powell’s comments on the potential impact of recent economic data that raised questions about whether inflation will continue to fall. Since the last meeting, the Fed has seen a stronger-than-expected jobs report, an uptick in inflation, and a strong reading for fourth-quarter Gross Domestic Product.
US Employment Report Friday Could Show Labor Market’s Resilience
Can the labor market keep it up? Investors will find out on Friday, when the U.S. employment report for January will show whether the economy can again beat estimates on job creation. The year ended with a strong jobs report for December, when 216,000 jobs added raced past estimates of 170,000 new jobs, and followed an unexpected drop in the unemployment rate in November. Market watchers will also be paying attention to wage data released with the report to see if average hourly pay continued to grow. Higher wages are good for workers, but could act to slow the fight against inflation as employers raise prices on goods and services to pass on higher costs to consumers.
Tech, Pharma, and Energy Earnings on Tap
Artificial intelligence (AI) will likely be a key topic of discussion when several leading tech companies report earnings this week, including Microsoft, Google, AMD (AMD), Meta, and Apple. When it delivers its report on Tuesday, Microsoft will update investors on its AI growth after integrating tools into products like its Bing search engine and Office software suite. Microsoft will also provide an update on growth from its Azure cloud service, which helped push the tech giant to an earnings beat in the prior quarter. Google parent Alphabet will report on Tuesday, when its AI products will be in the spotlight, with analysts expecting the search giant to again report growth in revenue and earnings, after the previous quarter where it showed a 9% year-over-year gain in ad revenue. Chipmaker AMD’s report that day will provide insight into the demand for AI semiconductors.
On Thursday, Apple could report its first year-over-year quarterly revenue gain in a year and its best earnings per share in two years as sales of the iPhone 15 take effect. The report will come as the company wrestles with some signs of slowing demand for its iPhones, though analysts believe AI products could boost interest in its devices. Meta’s report comes after CEO Mark Zuckerberg recently detailed its investment in AI chips. Amazon is also expected to report on how its investments into AI are benefiting its AWS cloud division.
Several pharmaceutical companies will report this week as well. Novo Nordisk could continue its momentum from sales of its weight-loss drug Wegovy when it reports on Wednesday. On Thursday, Merck’s report will show whether demand for its cancer and COVID-19 treatments remain high. AbbVie (ABBV), Novartis (NVS) and Bristol-Myers Squibb (BMY) are also scheduled to report this week. Investors will be watching for aircraft delivery numbers when Boeing (BA) reports on Wednesday. The company could also provide safety and production updates after its 737 MAX 9 aircraft was grounded by the Federal Aviation Administration.