The Week Ahead: The Fed and More Brexit
U.S. equity markets, or at least the S&P 500 index (SPX), had its best week last week since late November 2018. The benchmark index surged by nearly 3% on the week. In the process, it tentatively broke out above the major 2816-area resistance level that we’ve been talking a lot about lately.
Boeing’s stock dropped sharply due to the second fatal crash of its previously-revered 737 Max 8 jet. The stock (BA) continued to be weighed down as several airlines and countries, including the U.S. and China, grounded all 737 Max 8 aircraft. In turn, the decline in Boeing’s stock weighed especially heavily on the Dow Jones Industrial Average. This is due to the Dow’s unique price-weighted calculation.
On a brighter note, tech stocks continued to lead the way last week. This includes both the FAANG stocks (with the exception of a beleaguered Facebook (FB)) and semiconductor stocks. The XLK technology sector ETF surged a substantial 4.5%, its best weekly rise since late November.
Trade talks between the U.S. and China are still up in the air. The much-hyped Trump-Xi summit that was originally planned for late March at Trump’s Mar-a-Lago has apparently been canceled or postponed. While negotiations seem to have stalled, the good news is that lower-level talks appear to be progressing. And President Trump has said that he expects a resolution within the next three or four weeks.
And for the week ahead, here’s what’s upcoming:
The Week Ahead: The Fed and More Brexit
Once again, the U.S. Federal Reserve will be announcing its decision on interest rates and monetary policy on Wednesday. Currently, the futures market is pricing-in only a 1.3% likelihood of a rate hike then. Since the beginning of the year, the Fed has telegraphed an increasingly dovish and hesitant outlook. Expect this dovishness to last at least until the third quarter of this year. One important aspect of Wednesday’s FOMC release will be the Fed’s economic projections. This includes the well-known “dot plot,” which outlines Fed members’ interest rate outlooks going forward.
More Brexit Chaos
Finally, we have Brexit. Last week was a whirlwind of UK parliamentary votes. This is what happened last week in Parliament:
- Tuesday: Parliament rejected UK Prime Minister Theresa May’s plan for a second time by a vote of 391 to 242.
- Wednesday: Parliament voted 312 to 308 for an amendment ruling out a “no-deal” (or “hard”) Brexit.
- Thursday: Parliament voted to postpone the country’s departure from the European Union by a vote of 412 to 202. Also, however, Parliament voted 314 to 312 NOT to take control of the Brexit process away from May’s beleaguered government.
What happens next in this chaotic Brexit process? In the week ahead, reports suggest that Theresa May will likely hold a third vote on her Brexit deal as early as Tuesday. Apparently, May has been working feverishly to gain more support for it. Also, a major European Council meeting will take place later in the week. EU leaders will focus on whether to grant a Brexit deadline extension to the UK, and how long that extension would last.
A Smattering of Earnings
A new earnings season is on the horizon in April. But in the rather quiet interim, there are still a few key releases in the week ahead:
- Tuesday, After Market Close – FedEx (FDX) company earnings
- Wednesday, Before Market Open – General Mills (GIS) company earnings
- Wednesday, After Market Close – Micron Technology (MU) company earnings
- Thursday, Before Market Open – Darden Restaurants (DRI) company earnings
- Thursday, Before Market Open – Conagra Brands (CAG) company earnings
- Thursday, After Market Close – Nike (NKE) company earnings
- Friday, Before Market Open – Tiffany & Co (TIF) company earnings
- Friday, Before Market Open – Carnival (CCL) company earnings
Check out our Market Events & Earnings Calendar for more!
IMPORTANT: The information above should not be construed as investment advice and should not be considered as a solicitation to buy or sell securities. Trading and investing in the financial markets involves substantial risk of loss, and may not be suitable for all investors.
Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock may be mentioned.
Chief Market Strategist at The Technicals
With more than two decades of experience as an equity analyst for several major research firms, Don has covered individual stocks (both technically and fundamentally) across a wide variety of sectors and industries, including tech, financial, and retail. He has been quoted regularly in key financial media like Bloomberg and Reuters. Contact Don