What you need to know in the markets this week

The minutes of the Federal Reserve’s policy-making meeting in November are expected to help shape the short holiday week on Wall Street as markets appear to be recovering from a losing week.

The US stock and bond markets are closed on Thursday, November 24, for Thanksgiving. Trading will also end early on Black Friday, with markets closing at 1pm ET

A reading of the talks from the US Federal Reserve meeting earlier this month, scheduled for release on Wednesday, will be the culmination of a lighter economic calendar in the coming days. The earnings calendar will also be relatively sparse as Q3 reporting enters its final stretch.

Stocks posted a losing week last week despite modest gains Friday after a chorus of hawkish Fedspeak tempered optimism emerged from lighter October inflation data.

The S&P 500 fell 0.7% last week, while the Nasdaq Composite lost about 1.6% as central bank members said in nearly a dozen speeches throughout the week that they plan to continue aggressive policy tightening. The Dow Jones Industrial Average was more or less flat this week.

Minutes from the latest meeting of the FOMC, the Federal Reserve’s committee that votes on monetary policy, are likely to show officials planning a half-point rate hike at their December meeting.

Raphael Bostic, president of the Federal Reserve Bank of Atlanta, was the latest Fed member to signal this likelihood, saying in remarks on Saturday in Florida that he was comfortable moving away from 75 basis point increases at the next meeting, but the claimed rates could reach 4.75%-5% before the Fed finishes its current tightening cycle.

“If the economy continues as I expect, I think 75 to 100 basis points of additional tightening will be warranted,” Bostic told the Southern Economic Association in Fort Lauderdale. “It is clear that more is needed, and I believe that this level of policy rates will be sufficient to contain inflation within a reasonable timeframe.” Bostic is not currently a voting member of the FOMC.

President and Chief Executive Officer of the Federal Reserve Bank of Atlanta Raphael W. Bostic speaks at an event of the European Financial Forum in Dublin, Ireland on Feb. 13, 2019. REUTERS/Clodagh Kilcoyne

President of the Federal Reserve Bank of Atlanta Raphael W. Bostic. REUTERS/Clodagh Kilcoyne

Investors applauded the easing of inflation reports, but Bostic called the numbers a “mixed bag.” The consumer price index (CPI) rose 7.7% last month, up from 8.2% in September. While the figure showed price hikes cooled faster than expected in October, inflation remains more than three times the Federal Reserve’s price stability target of 2% — even though officials have raised interest rates six times this year, including four consecutive increases of 0 .75%.

Fed Chair Jerome Powell said at a press conference after the meeting this month that he and his colleagues have “still some ways to mitigate rising prices,” admitting that the inflation picture has become more challenging.

“That means we have to have more restrictive policies, and that narrows the path to a soft landing,” he said.

Aggressive rate hikes threaten to push the US economy into recession, with Fed officials recently more openly acknowledging this risk.

Fed Chairman Powell recalibrated monetary policy at November’s FOMC meeting by adopting a new ‘speed vs. destination’ paradigm – signaling he intends to achieve a higher terminal fed funds rate while doing so at a slower pace,” EY Parthenon Chief Economist Gregory Daco said in a recent note. “Central banks’ determination to aggressively tighten monetary policy, coupled with the lagged effects of monetary policy on the economy, increase the likelihood of policy over-tightening.”

Federal Reserve Board Chairman Jerome Powell speaks at a news conference following a closed two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, U.S., November 2, 2022. REUTERS/Elizabeth Frantz

Jerome Powell, Chairman of the Federal Reserve Board, speaks at a news conference in Washington, U.S., November 2, 2022. REUTERS/Elizabeth Frantz

Goldman Sachs has raised its projection for the Federal Reserve’s final interest rate to a range of 5% to 5.25%, marking another 25 basis point hike in May, noting that the investment bank’s risks to the Fed forecast are tilted upwards.

“Inflation is likely to remain uncomfortably high for a while, and this could put pressure on the FOMC to push for a longer series of small increases next year,” economists led by Jan Hatzius said.

Elsewhere on the economic calendar this week, measurements of durable goods orders and global PMI data will provide investors with the latest snapshots of industrial and manufacturing activity. Measures of new home sales and consumer confidence from the closely monitored University of Michigan research are also available.

Wall Street is approaching the end of earnings season, but results from Dell Technologies (DELL), JM Smucker (SJM), Zoom Video (ZM) and the Dollar Tree (DLTR) will be some of the most important company updates in the next week.

Fewer companies worry about a recession in the third quarter than in the second quarter, according to data from FactSet Research.

Of the S&P 500 companies that talked about the numbers from September 15 to November 16, 26% fewer companies mentioned the term “recession.”

Yet this quarter still marks the third-highest number of companies worried about a possible economic downturn since at least 2010, according to FactSet data.

Economic calendar

Monday: No notable reports scheduled for release.

Tuesday: Chicago Fed National Activity IndexOctober (0.10 in previous month); Richmond Fed Manufacturing Activity IndexNovember (-7 expected, -10 in previous month)

Wednesday: MBA Mortgage Applicationsweek ended November 18 (2.7% in previous week); durable goods ordersOctober tentative (0.5% expected, 0.4% in previous month); Durable goods Excluding transportOctober tentative (0.1% expected, 0.5% in previous month); Initial unemployment claimsweek ending Nov. 19 (225,000 expected, 222,000 in prior week); Ongoing receivablesweek ended November 12 (1.507 million in previous week); S&P Global US Manufacturing PMIprovisional November (50.0 expected, 50.4 during previous month); S&P Global US Services PMINovember tentative (48.0 expected, 47.8 in previous month); S&P Global US Composite PMINovember provisional (48.2 in previous month); Consumer Confidence from the University of MichiganNovember final (55.5 expected, 54.7 earlier); New home salesOctober (575,000 expected, 603,000 last month); New home salesmonth-on-month, October (-4.6% expected, -10.9% last month); FOMC meeting minutes, November 1-2

Thursday: Thanksgiving Day. No notable reports scheduled for release.

Friday: Black Friday. No notable reports scheduled for release.

Earnings calendar

Monday: Agilent (A), Dell Technologies (DELL), JM Smucker (SJM), Jacobs Engineering (J), Li Auto (LI), Urban Outfitters (URBN), Weber (WEBR), Zoom Video (ZM)

Tuesday: Best Buy (BBY), HP (HPQ), Abercrombie & Fitch (ANF), American Eagle Outfitters (AEO), Analog Devices (ADI), Autodesk (ADSK), Baidu (BIDU), Burlington Storess (BURL), Canadian Solar ( CSIQ), Dick’s Sporting Goods (DKS), Dollar Tree (DLTR), Guess? (GES), Jack In The Box (JACK), Medtronic (MDT), Nordstrom (JWN), Vipshop (VIPS), VMware (VMW), Warner Music Group (WMG)

Wednesday: Deere (DE), SentinelOne (S)

Thursday: Thanksgiving Day. No notable reports scheduled for release.

Friday: Black Friday. No notable reports scheduled for release.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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