Markets started the week on a concerned note as futures were pointing to another down day. Investors are bracing for key economic indicators. In particular, they’re looking for the US jobs data and retail sales numbers, as these will provide key guidance in reading the tea leaves on what’s happening in the economy right now.
Both during the upcoming week and beyond, market participants will be keeping a watchful eye on these important reports. The upcoming jobs data, which is closely monitored for its implications on employment trends, will play a vital role in shaping investor sentiment. Further, retail sales are the first look at consumer spending, the most important driver of economic strength.
This reluctance in the markets is indicative of the ongoing uncertainty surrounding what the Federal Reserve will do next with monetary policy. More importantly for investors, they want to understand how these economic indicators will shape the Fed’s path forward in the coming months. Now inflationary pressures and interest rate discussions are taking over the national discussion. Consequently, either report would be sure to have a tremendous influence on the immediate market direction.
Counter to US market trends, European equities enjoyed the favor of rotation flows. This dramatic change in investment strategies continued to pump up European stocks. They continued to pick up steam while largely flying under the radar of nervous global markets. In much the same way, UK equities were big beneficiaries of this rotation, showcasing a wider gap in performance than that seen from their US peers.
There was more trouble for US technology stocks, with the Nasdaq 100 making up most of the move down for these growth-sector darlings. The tech-heavy index has been bludgeoned by increasing interest rates and inflation paranoia. All of this has resulted in a dramatic drop in tech stocks, particularly those tied to the public cloud. This continued battle between the forces of change demonstrates the dynamic and rapid nature of investor risk in a constantly shifting marketplace.
Even as investors process these uncertainties, attention is turning to the next key data points that could roil or invigorate markets with the promise of new trends. How economic indicators match up with evolving investor sentiment will be key in determining market trajectories in the days ahead.