Trump’s Address to Congress and Fed’s Remarks To Stir Markets Next Week
U.S. stocks closed higher on Friday, with benchmarks reversing higher to pare early losses. On Wall Street, the Dow Jones Industrial Average rose 0.05 percent to end at 20,821.76, extending its winning streak to 11 sessions. This is the longest rally since 1987. Meanwhile, the S&P 500 gained 0.15 percent to finish at 2,367.34 and the Nasdaq Composite added 0.17 percent to close the week at 5,845.31.
The U.S. Commerce Department on Friday said that purchases of new U.S. homes in January were slower than forecast. Sales climbed 3.7 percent to a 555,000 annualized pace, missing the median forecast for a rise of 571,000 units. Meanwhile, also publishing data on Friday, the University of Michigan reported Consumer Sentiment Index hit 96.3 in February, marginally higher than expectation of 96.1.
In the week ahead, investors will be looking to President Donald Trump’s address to Congress on Tuesday for remarks on his economic agenda including his notably tax reform and border adjustment tax. While Trump’s “phenomenal tax-cut plan” has not been outlined in detail, his border adjustment tax is expected to put a 20% tax on imports into the U.S. and keep tax on exports intact.
Besides Trump’s address on Tuesday, investors will be watching public appearances of Fed policymakers next week. After Dallas Fed President Rob Kaplan’s speech on Monday, San Francisco Fed President John Williams and St. Louis Fed President James Bullard are on tap on Tuesday. Dallas Fed’s Kaplan will talk again with Fed Governor Lael Brainard on Wednesday, followed by remarks of Cleveland Fed President Loretta Mester on Thursday.
Finally on Friday, a handful of Fed officials including Fed Chair Janet Yellen will deliver their speeches which are highly awaited for firm signals on the timing of its next rate move.
In addition, investors will also be watching a revised reading of fourth-quarter U.S. growth to gauge the strength of the economy which is due for release on Tuesday. The headline figure is forecast to come out at a rise of 1.2% annual rate in the three-month period to December 2016. If confirmed, it would be an upward revise compared to a preliminary estimate which showed the economy expanded at a rate of 1.9%.
U.S. data will also feature durable goods orders and pending home sales due on Monday, consumer confidence on Tuesday, personal consumption expenditures and ISM manufacturing on Wednesday. Rounding up the week are weekly jobless claims on Thursday which will be followed by the ISM non-manufacturing survey on Friday.
British Pound plummeted versus its American counterpart on Friday but still ended the week higher. Next week, U.K. government is about to publish data on February manufacturing sector activity on Wednesday before releasing report on the construction sector on Thursday which is followed by data on the service sector on Friday. While readings of manufacturing and services sectors are forecast to inch lower this month, construction activity is expected to improve slightly in the same period.
The euro zone will publish flash inflation figures for February on Thursday and retail sales data for January on Friday. The consensus forecast for the current month’s CPI is that the report will show an increase of 2 percent while the core prices are expected to increase 0.9%, unchanged from the prior month.
Last but not least, the Bank of Canada is to announce its benchmark interest rate and publish a rate statement on Wednesday. The Statistics Canada is scheduled to report December GDP data on Thursday.