The market rally is at its most fragile point in months, with the S&P 500 ending below 5,000 for the first time since late February. The Nasdaq Composite dropped over 5% for the week, while the Dow remained flat. This week, critical readings on economic growth and inflation, as well as the start of Big Tech earnings, will determine if the malaise continues.
Investors have been scaling back their projections for Federal Reserve interest rate cuts due to bumpy inflation readings. The upcoming PCE reading on Friday will be crucial, with economists expecting a slight decrease in core PCE inflation from the previous month.
On the economic front, Thursday will bring the first look at first-quarter economic growth, with economists expecting a lower growth rate compared to the previous quarter. Despite positive economic indicators, rising bond yields are becoming a concern for investors.
Earnings reports have not been impressing investors, even with better-than-expected results. Big Tech companies like Meta, Microsoft, and Alphabet are expected to report in the coming week, with high earnings growth expectations.
Overall, the market is facing challenges from various fronts, including inflation, economic growth, and earnings disappointments. Investors will closely watch the upcoming economic data and earnings reports to gauge the market’s direction in the coming weeks.
