What to Expect in the Markets Next Week
U.S. equity markets rebounded this week with the Nasdaq and S&P 500 leading the gains as investors focused on more strong earnings reports and hopes that corporate profits will continue to expand in the third and fourth quarters. Those profits will be challenged by uncertainty around the delta variant and the impact it could have across global economies.
With earnings season behind us, investors will head into the coming week with several key economic reports, highlighted by the August nonfarm payrolls report on Friday. The corporate calendar will be very quiet ahead of the Labor Day weekend here in the U.S.
- On Monday, we’ll get key reports on economic and consumer sentiment in Europe.
- The U.S. Case-Shiller Home Price Index for July will be released on Tuesday, measuring home prices across America’s 20 largest cities.
- Several tech companies including Zoom, CrowdStrike, NetEase, MongoDB, Veeva Systems, DocuSign, Okta, and Asana report earnings this week.
- The U.S. nonfarm payrolls report for August will be released on Friday, and could influence the Fed’s decision on when to taper its $120 billion in monthly bond purchases.
Here are the returns for major asset classes and Bitcoin year-to-date:
Monday August 30:
- EA Economic and Consumer Sentiment (August).
- U.S. Pending Home Sales (July).
- China Non-Manufacturing PMI (August).
- Japan Industrial Production (July).
- Zoom (ZM), Li Auto (LI), and H&R Block (HRB) Report Earnings.
Tuesday August 31:
- U.S. Case-Shiller Home Price Index (July).
- China Caixin Manufacturing PMI (August).
- Japan Consumer Confidence (August).
- India GDP Growth (Q2).
- EA Inflation (August).
- CrowdStrike (CRWD) and NetEase (NTES) Report Earnings
Wednesday September 1:
- U.S. ISM Manufacturing Report (August).
- U.S. Vehicle Sales (August).
- India Markit Manufacturing PMI (August).
- EA Markit Manufacturing PMI (August).
- EA Unemployment (July).
- Hormel Foods (HRL), Campbell Soup (CBP), MongoDB (MDB), Veeva Systems (VEEV), Okta (OKTA), and Asana (ASAN) Report Earnings.
Thursday September 2:
- U.S. Jobless Claims.
- China Caixin Services PMI (August).
- EA Producer Price Index (July).
- Broadcom (AVGO), Hewlett Packard (HPE), and DocuSign (DOCU) Report Earnings.
Friday September 3:
- U.S. Nonfarm Payrolls (August).
- U.S. Markit Services PMI (August).
- U.S. Non-Manufacturing PMI (August).
- India Markit Services PMI (August).
- EA Markit Services PMI (August).
Events Next Week
On Monday, we’ll get key reports on economic and consumer sentiment in Europe. The ECB has remained accommodative, much like its U.S. counterpart, by holding interest rates near 0% and buying government bonds to maintain liquidity in the capital markets. But consumer sentiment has been slipping in the eurozone amid the rise of the delta variant. That trend likely continued in August.
U.S. Home Prices
On Tuesday, the U.S. housing market will be back in focus as the Case-Shiller Home Price Index for July will be released, which measures home prices in the 20 biggest cities in America. The June report showed that prices rose 17% year-over-year, with the largest spikes in Phoenix, San Diego and Seattle. Prices likely remained high throughout July, but have shown signs of easing in August in some markets.
Manufacturing in Focus
On Wednesday the ISM Manufacturing report for the U.S. in August will be released. Manufacturers are juggling higher prices, labor shortages and supply chain disruptions around the world. Many expected those conditions to have eased by now, but the spread of the delta variant has prolonged those conditions, and U.S. manufacturers, especially automakers, are operating at reduced capacities.
August Employment Report
On Friday, the U.S. nonfarm payrolls report for August will be released. This may be the key economic indicator that helps the Federal Reserve decide when to taper its $120 billion in monthly bond purchases as the Fed is intent on supporting the capital markets until the U.S. is close to full employment, which is between 3-4%. Economists expect at least 600,000 jobs to have been added in August, which would represent slower job growth than the past two months, and the unemployment rate to fall to 5.3% from 5.4%. That may not be fast enough for the Fed to taper its bond buying program.