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What to know this week in markets

Minutes from the Federal Reserve’s November policy meeting are expected to help shape the abbreviated holiday on Wall Street, as markets look to rebound from a week of losses.

The US stock and bond markets will be closed on Thursday 24 November in connection with the Thanksgiving holiday. Trading will also end early on Black Friday, with markets closing at 1:00 PM ET

A reading of discussions from the US central bank’s meeting earlier this month, set for release on Wednesday, will be the highlight of a lighter economic calendar in the days ahead. The earnings calendar will also be relatively sparse as reporting for the third quarter enters its final stretch.

Stocks posted a losing week last week despite modest gains on Friday after a chorus of hawkish Fedspeak dampened optimism emerging from lighter inflation data from October.

The S&P 500 fell 0.7% last week while the Nasdaq Composite fell about 1[ads1].6% as central bankers asserted in nearly a dozen speeches this week that they intend to continue with aggressive policy tightening. The Dow Jones Industrial Average was roughly flat for the week.

Minutes from the FOMC’s latest meeting, the Federal Reserve committee that votes on monetary policy, are likely to show officials planning a half-point rate hike at the December meeting.

Federal Reserve Bank of Atlanta President Raphael Bostic was the latest Fed member to signal that likelihood, saying in comments on Saturday in Florida that he was comfortable walking away from 75 basis point hikes at the next meeting, but implied rates could reach 4.75%-5% before the Fed finishes its current tightening cycle.

“If the economy continues as I expect, I think 75 to 100 basis points of further tightening would be warranted,” Bostic said in remarks to the Southern Economic Association in Fort Lauderdale. “Clearly more is needed, and I think this level of the policy rate will be sufficient to moderate inflation over a reasonable time horizon.” Bostic is currently a non-voting member of the FOMC.

What to know this week in markets

President of the Federal Reserve Bank of Atlanta Raphael W. Bostic. REUTERS/Clodagh Kilcoyne

Investors have cheered easing inflation reports, but Bostic called the numbers a “mixed bag.” The consumer price index (CPI) rose to a clip of 7.7% last month, down from 8.2% in September. While the figure showed price increases cooled more quickly than expected in October, inflation remains more than three times the Federal Reserve’s price stability target of 2% — even though officials have raised interest rates six times this year, including four straight 0.75% hikes.

Fed Chairman Jerome Powell said at a post-meeting news conference this month that he and his colleagues have “some way to go” to ease rising rates, admitting that the inflation picture has become more challenging.

“That means we have to have more restrictive policies, and that limits the path to a soft landing,” he said.

Aggressive rate hikes risk tipping the US economy into recession, with Fed officials recently coming to more openly acknowledge that risk.

“Fed Chairman Powell recalibrated monetary policy at the November FOMC meeting by adopting a new “velocity vs. destination” paradigm — indicating an intention to reach a higher terminal rate while doing so at a slower pace,” EY Parthenon chief economist Gregory Daco said in a recent note. “Central banks’ determination to tighten monetary policy aggressively together with the lagged effects of monetary policy on the economy increase the chances of an over-tightening.”

Federal Reserve Chairman Jerome Powell speaks during a news conference after a closed two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, U.S., November 2, 2022. REUTERS/Elizabeth Frantz

Federal Reserve Chairman Jerome Powell speaks during a news conference in Washington, U.S., November 2, 2022. REUTERS/Elizabeth Frantz

Goldman Sachs has raised its forecast for the Federal Reserve’s terminal rate to a range of 5% to 5.25%, with another increase of 25 basis points in May, noting that the investment bank’s risk to the Fed forecast has tilted up.

“Inflation is likely to remain uncomfortably high for some time, and this could put pressure on the FOMC to deliver a longer series of small hikes next year,” said economists led by Jan Hatzius.

Elsewhere on the economic calendar this week, durable goods readings and global PMI data will provide investors with the latest snapshots of industrial and manufacturing activity. Measurements of new home sales and consumer sentiment by the University of Michigan’s closely watched survey are also in print.

Wall Street is coming to the end of earnings season, but results from Dell Technologies ( DELL ), JM Smucker ( SJM ), Zoom Video ( ZM ) and Dollar Tree ( DLTR ) will be among some of the most important corporate updates this coming week.

Fewer companies cited worries about a recession in the third quarter compared to the second quarter, according to data from FactSet Research.

Of S&P 500 companies that conducted earnings calls from Sept. 15 to Nov. 16, 26% fewer companies cited the term “recession” — 179 mentioned the word, down from 242 in the previous quarter’s earnings period.

Still, this quarter remains the third-highest number of companies citing concerns about a potential economic slowdown since at least 2010, according to FactSet data.

Financial calendar

Monday: No significant reports are planned for publication.

Tuesday: Chicago Fed National Activity IndexOctober (0.10 in the previous month); Richmond Fed Manufacturing Activity IndexNovember (-7 expected, -10 last month)

Wednesday: MBA loan applicationsweek ended November 18 (2.7% below previous week); Orders of durable goodsprovisional October (0.5% expected, 0.4% last month); Durable goods excluding transportprovisional October (0.1% expected, 0.5% last month); Initial unemployment claimsweek ended Nov. 19 (225,000 expected, 222,000 during previous week); Continuing requirementsweek ended November 12 (1.507 million below previous week); S&P Global US Manufacturing PMIprovisional November (50.0 expected, 50.4 during the previous month); S&P Global US Services PMIprovisional November (expected 48.0, 47.8 last month); S&P Global US Composite PMIprovisional November (48.2 during the previous month); University of Michigan Consumer SentimentNovember final (55.5 expected, 54.7 previously); New home salesOctober (575,000 expected, 603,000 during the previous month); New home salesmonth-on-month, October (-4.6% expected, -10.9% last month); FOMC meeting minutes, 1-2 November

Thursday: Thanksgiving Day. No significant reports are planned for release.

Friday: Black Friday. No significant reports are planned for release.

Income calendar

Monday: Agilent (A), Dell Technologies (DELL), JM Smucker (SJM), Jacobs Engineering (J), Li Auto (LI), Urban Outfitters (URBN), Weber (WEBR), Zoom Video (ZM)

Tuesday: Best Buy (BBY), HP (HPQ), Abercrombie & Fitch (ANF), American Eagle Outfitters (AEO), Analog Devices (ADI), Autodesk (ADSK), Baidu (BIDU), Burlington Storess (BURL), Canadian Solar ( CSIQ), Dick’s Sporting Goods (DKS), Dollar Tree (DLTR), guess? (GES), Jack In The Box (JACK), Medtronic (MDT), Nordstrom (JWN), Vipshop (VIPS), VMware (VMW), Warner Music Group (WMG)

Wednesday: Deere (DE), SentinelOne (S)

Thursday: Thanksgiving Day. No significant reports are planned for release.

Friday: Black Friday. No significant reports are planned for release.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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