US markets look set for a flat open on Monday with the S&P 500 hovering around record highs as attention turns to Federal Reserve minutes released on Wednesday that could give clues on the likely timing of a hike in US interest rates.
The S&P 500 has made new records with corporate earnings growth looking flat over the year and the economy slowing, so clearly monetary policy is still driving markets.
Economic data in the two weeks since the last Fed meeting has continued to deteriorate. First quarter growth estimates are likely to be revised lower and Q2 is having a slow start, implying the cause is not just winter weather. Retail sales, producer price inflation data, industrial production and consumer sentiment all missed expectations.
In the Fed’s last meeting it rightfully downgraded its view on the economy but still implied a rate hike could happen as early as June. It seems pretty unlikely now that the Fed would risk a move in June but depending on the minutes, September could still be on. A determination to hike rates despite the poor data could rattle markets, but given the minutes are two-weeks old, investors may just look through them.
The consumer has become a thorn in the side of the US recovery with spending still in the doldrums despite the fall in oil prices and now confidence dropping back. A number of big retailers report earnings this week and will shed some more light on the state of the consumer and how businesses are reacting.
Wal-Mart (NYSE:WMT), Home Depot, Target, Staples, Lowe’s, Sears and TK Maxx-owner TJX all report this week with just Urban Outfitters (NASDAQ:URBN) reporting on Monday after the close.
Futures suggest the:
S&P 500 will open unchanged at 2,122 with the
Dow Jones expected to open 4 points higher at 18,276 and the
Nasdaq 100 7 points lower at 4,487.
CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.