Stock Market Updates: Crucial Interest Rate Decision Will Drive Markets in The Week Ahead
Markets saw a spectacular fall last week after higher-than-expected inflation numbers raised expectations of an interest rate decision by the Central Bank in its upcoming policy meeting. For the week, the Dow Jones fell more than 4%, the S&P 500 declined 4.8%, while the tech-heavy based plunged 5.5%. $S&P 500(.SPX)$$DJIA(.DJI)$$NASDAQ(.IXIC)$ Two-year interest rates rose to 3.87%, with a spread between the two-year and ten-year now widening to 0.42%, which is often a leading indicator of a recession.The week ahead is packed with a crucial central bank meeting where policymakers will decide on futureinterest rates and key housing data that will show the impact of contracting demand and increased mortgage rates on the housing market.Federal Reserve Policy MeetingIn its two-day meeting on Tuesday and Wednesday, the US Federal Reserve is expected to meet to discuss its decision on the prevailing interest rates in the economy. While economists had previously anticipated the pace of rate hikes to slow down to 50 basis points (bps) per meeting, the recent increase ininflationhas made some fear a 75 bps or even a 100 bps hike in the current meeting.So far, the Fed has raised its federal funds’ rateby a cumulative 225 bps since Marchas it tries to combat inflation which is near a four-decade high. This has already resulted in a severe decline across theequity, fixed income, commodities, and housing market, but a more aggressive central bank decision could mean that asset prices could fall further.Housing Market UpdatesThe week ahead is packed with housing market data from new housing Strats to existing home sales, which is sure to paint a clear picture of how markets are impacted based on rising mortgages and falling demand.New Housing Permits, Source: TradingEconomicsOn Tuesday, the US Census Bureauis set to release data on housing starts and building permits for August. Consensus forecasts show that housing starts willfall moderately from 1.446 millionin July to 1.4 million in August due to falling consumer demand and rising material costs due to inflation.On Wednesday, the National Association of Realtor swill release updated data for existing home sales in august. Existing home sales have fallen consecutively for six months and are set to decline again in August, as mortgage rates crossed 6% for the first time in 14 years.Existing Home Sales, Source: TradingEconomicsForecasts show that home sales will fall to 4.7 million units in August, down from 4.81 million homes sold in July and far from the peak of 6.49 million homes sold in January. Housing Markets Could see more weakness in the coming months as mortgage rates continue to increase and consumers see their existing home equity diminish.S&P 500 ChartS&P 500 Chart, Source:TradingViewBottom LineThe week ahead is packed with a crucial Federal Reserve meeting on interest rates, determining where markets are headed next. Furthermore, housing market updates should also help market participants better understand the current state of the economy.Follow me to learn more about market moves!!
Stock Market Updates: Inflation and Retail Sales Reports Will Drive Markets in The Week Ahead
Equity markets snapped their three-week losing streak as market participants regained confidence fromweakening oil prices, the rally in the dollar finally ran out of steam, and inflation came down. For the week, the Dow climbed 2.7%, the S&P 500 added 3.7%, and the tech-focused Nasdaq surged over 4%.The week ahead is packed with key inflation reports, including the release of the consumer and producer price index, and retail sales data, which will determine where markets are headed next.Inflation UpdateThe week ahead is packed with crucial inflation data that could determine the Federal Reserve’s interest rate decision in its next meeting and, subsequently, the direction of where the market is headed next.US CPI Data, Source:Investing.comThe Bureau of Labor Statistics (BLS) is set to release the Consumer Price Index(CPI) for the month of August on Tuesday. CPI, which tracks the rise in prices on the demand side, is forecasted to rise slightly to 8.7%, compared to 8.5% in July. While inflation has slowly been trending down fromthe 40-year peak of 9.1% seen in Junedue to falling energy costs, prices for other goods and services are continuing to rise.US Monthly PPI Data, Source:Investing.comOn the other end of the Isle is the Producer Price Index(PPI), which tracks inflation on the supply side. PPI is expected to continue to decline in August by around 0.3%, after showing an unexpected contraction of 0.5% in July. The report, which many consumers as a leading indicator for inflation, has risen by 8.9% annually, which is the lowest level seen since October 2021. As demand continues to weaken, driven by inflation, PPI could fall further, triggering a pivot from the Federal Reserve and, subsequently, a rebound in the stock indices.Retail SalesRetail sales will be another crucial factor in tracking the robustness of consumer demand in the face of tightening macroeconomic conditions. The US Census Bureau is set to release the report on Retail Sales for the month of August on Thursday. Market participants are estimating Retail sales to remain stagnant in August, similar to the numbers seen in July.US Retail Sales Growth, Source:TradingEconomicsRetail Sales have been slowing in recent months due to several factors, including the impact of inflation and declining consumer confidence, which has impacted purchasing habits. The Fed has considered retail Sales to be robust throughout the year, but weakness in the indicator could lead to different policy decisions.S&P 500 ChartS&P 500 Chart, Source:TradingViewBottom LineBottom LineThe week ahead is packed with crucial reports on sales and inflation, which will surely impact the decision-making ability of the Federal Reserve in its next meeting, and subsequently decide where the markets are headed next.$DJIA(.DJI)$$NASDAQ(.IXIC)$$S&P 500(.SPX)$ Follow me to learn more about analysis!!
The EV industry is one of the fastest-growing, and Tesla is the poster-child. Led by an outspoken CEO, the company has smashed one record after another. However, should you be investing your money in Tesla? Keep reading to see what analysts recommend.With this article, I mark the opening of a new section on my blog, dedicated to investing in the Electric Vehicles.About TeslaTesla is undoubtedly the company that made electric vehicles mainstream, supporting its cars with a global network of fast DC public chargers known as Superchargers. It had a massive financial year in 2021, shipping more than 900,000 battery-electric vehicles (BEVs), by far more than its competitors.Revenue for the last quarter was $17.7 billion, beating expectations by more than half a billion dollars. It represented a 6 percent jump. Adjusted earnings came in at $2.54 per share, a massive increase of 218 percent over the same quarter in the previous year. It was the fourth straight quarter of gain for Tesla.Tesla, however, is not immune to the uncertainties of doing business. Thanks to increasing raw materials and logistics costs, the automaker has had to raise prices on its cars, and its cheapest electric vehicle now starts at $47,000, a jump of $2,000.Increased price notwithstanding, Tesla struggles to meet the demand for its cars, some of whom have months of waiting times. Next year, the company is expected to release the much-awaiting Cybertruck pickup truck and its Class 8 electric truck, the Tesla Semi, before that.Tesla also makes solar panels and battery energy storage systems like Powerwall and Megapack. It is in the process of commissioning two new EV and battery production facilities in Texas and Berlin.What are experts saying about Tesla stock?While bulls will tout the solid performance of Tesla in recent quarters, there are reasons to listen to the bears before investing your money in Tesla stock.For example, the automobile industry is a tough one to operate in. Competitors are coming strong, too, as they vie to unseat Tesla as the market leader in EVs. BYD moved 93,000 electric vehicles in the last month of 2021, which is too close to Tesla’s monthly average of 102,000 in the quarter. Stateside, competitors like GM and Ford are ramping up electric vehicle production and investments.Apart from that, many experts point out that Tesla’s stock trades at a significant premium, which the bulls claim is well deserved. However, Tesla stock could contract because even the bulls may change their mind as many of Tesla’s promises are still a work in progress.Moreover, Tesla may become a victim of its own stellar performance as it is expected to maintain that level of growth. Any stall or misstep could send the stock crashing.Is investing in Tesla stock a smart move?Unless you are a die-hard Tesla fan or have a huge appetite for risks, investing in Tesla stock is not the most prudent financial decision, especially at its current valuation. The P/E ratio is currently sitting at 184, which is very high.On the other hand, the current dip might represent a perfect entry opportunity:Hope this was useful for you! Please note that the above content is not an investment advise and shall be considered only for informative purpose.Feel free to share you comments below.
Is not breaking news the fact that recently Discord turned down a $12 billion buyout offer from Microsoft Corp. The Chat startup has become really popular during the Covid-19 outbreak and even without an official announcement, it’s becoming quite clear the intention of opening an IPO.The signsAfter the Microsoft turn down, the company has reached a $17 billion valuation, and the company is constantly reaching new customers, with more than 140 million users already. One week ago, Bloomberg reported that Discord was interviewing investment bankers, possibly in order to prepare to go public, indicating that a formal announcement might be closer than expected.The potentialDiscord is constantly innovating the way millions of gamers and common users communicate and connect around the world. Two of the most recent advances presented by the company are: The voice-changing system to chat with strangers without exposing your identity; and the news that Discord now works natively on M1 chip Macs, solving most of the issues users have reported.In the spotlightWith more than $100 million in revenue in 2020, Discord finds a place between the top 3 of the best IPOs to keep an eye on. It shares a spotlight with other popular companies such as Spotify Technology SA and Slack Technologies Inc. The Public Offering is expected to occur by the end of this year or until the first months of 2023.Hope this was useful for you! Please note that the above content is not an investment advise and shall be considered only for informative purpose.Feel free to share your opinions in the comments section below. Follow to get more unique content!