This week promises pivotal developments in the financial and economic spheres, with several key events scheduled to unfold. The Federal Reserve's much-anticipated two-day policy meeting is set to conclude on Wednesday, providing crucial insights into the future direction of interest rates. Meanwhile, Nvidia CEO Jensen Huang will deliver his influential annual keynote address at the GTC conference in San Jose, California, on Tuesday afternoon. Additionally, the Census Bureau is poised to release its latest residential construction data on Tuesday morning, a day rich in significant economic indicators.
The University of Michigan's consumer sentiment survey revealed a concerning drop in March, reaching its lowest level since November 2022. Compounding the issue, the one-year inflation outlook within the same survey rose to its highest point since November 2022. In contrast, February's consumer price index and producer price index were lighter than expected, providing a mixed picture of inflationary pressures.
The stock market faced turbulence last week, with the Dow experiencing a 3% decline, marking its worst weekly performance since March 2023. This downturn followed a previous week of losses for the 30-stock average. Both the Nasdaq and the S&P 500 showed signs of volatility, with the former remaining in correction territory and the latter oscillating between gains and losses. The S&P 500 ended the week down by 2.3%, while the tech-heavy Nasdaq saw a 2.4% decline.
Market participants are closely monitoring the Federal Reserve's actions, as current pricing suggests three interest rate cuts this year. However, the Fed is widely expected to maintain interest rates within the range of 4.25% to 4.5%. The upcoming release of the Summary of Economic Projections (SEP) will shed light on inflation and economic growth forecasts, alongside the dot plot of rate expectations.
Tuesday morning will see the release of critical economic data from the Census Bureau and the Federal Reserve. The Census Bureau's residential construction report, often referred to as housing starts, will provide valuable insights into the housing market's health. Concurrently, the Fed will unveil its assessment of industrial production and capacity utilization, offering further context for economic activity.
On Tuesday afternoon, all eyes will turn to Nvidia's annual GTC conference in San Jose. CEO Jensen Huang's keynote address is highly anticipated as he is expected to outline Nvidia's strategic direction and innovations in AI technology. The company's role as a leader in AI chips underscores the significance of this event for industry stakeholders.
"The keynote is very important…. You've got to reestablish that it's actually a company that is a factory for the future," – Jim Cramer
Investors are keenly aware of Nvidia's influence in shaping the future of AI technologies and their broader implications across various sectors. The GTC conference serves as a platform for showcasing breakthroughs that could redefine industry standards.
Amid these developments, market analysts are assessing the broader economic landscape. The recent dip in consumer sentiment coupled with inflationary concerns highlights the challenges faced by both consumers and policymakers. The mixed signals from February's CPI and PPI reports add complexity to forecasts of future inflation trends.
The S&P Short Range Oscillator remained in oversold territory throughout last week, reflecting heightened market volatility and investor uncertainty. With key updates from the Federal Reserve imminent, market participants are bracing for potential shifts in monetary policy and their implications for economic growth.