U.S. markets set foot in a highly anticipated week, regarding the first-tier economic data due for release, underscored by the Labor Department’s jobs report and the Federal Reserve Policy meeting, as investor-sentiment will need a set of positive economic data, especially after slower than expected growth in the first quarter.
The Labor Department’s employment report a month ago was a significant negative surprise, reporting that only 88,000 jobs were created in March versus the consensus forecast for 200,000.
Before that, the ADP Employment Report, compiling the number of new jobs created in the private sector in April will be released on Wednesday.
Although the jobs report will be the most important next week, another highly significant event will be the policy meeting of the Federal Reserve.
Economists do not expect much change in Fed policy, but will keep close watch on the meeting for clues over the next period, and the future of the Fed’s stimulus program.
Next week will also include updates of some of the most disappointing reports in the last two months.
The Conference Board’s Consumer Confidence Index for April will be released on Tuesday. Its last reading was a significant negative surprise, showing a decline from 68.0 in February to 59.7 in March. The index has an impact on retail sales, which have also disappointed in recent reports.
The Chicago PMI will be released on Tuesday, the ISM Manufacturing Index on Wednesday, and the ISM non-manufacturing Index (services sector) on Friday. The last reports of all three were significant negative surprises.
Next week’s heavy schedule will be closely watched, especially after that GDP growth in the first quarter fell short of forecasts, coming in at 2.5% versus the consensus forecast of 3.3%. Further, much of the reported growth was the result of a build-up of corporate inventories.
The GDP report was the first estimate of first quarter economic growth, and will be subject to revisions in each of the next two months as more data becomes available. The problem is that with the negative surprises in economic reports for February and March those GDP revisions are quite likely to be to the downside. So next week’s already important economic reports take on even more significance.
On the corporate front, major companies are due to release first-quarter results this week, such as Facebook, Visa, MasterCard, CBS Corp, and Time Warner.
As for Facebook, analysts expect a first-quarter profit of 12 cents and revenue growth of 36% to $1.44 billion.
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