What we learned last week:
“He looks angry.
It’s not about how he looks, it’s about how he feels.”
- Dark Winds, Season 3 Episode 8, Iron Horse
For the third straight week the Nasdaq, Dow Jones Industrial Average, and S&P 500 all finished lower and three finished the week down by more than 1%.
The two main drivers of stocks last week were the volatility in the energy markets due to the conflict in Iran, and Wednesday’s inflation report.
The oil and gas sector remained highly volatile as the ongoing U.S. – Iran conflict kept the Straight of Hormuz at the center of markets attention. The week and oil prices started on a positive note Monday as comments by President Trump to CBS news indicated the war in Iran is “very much complete, pretty much”, pushing Brent and Crude oil prices below $90 a barrel. Unfortunately, this wasn’t enough.
Later in the week Iran’s new leader vowed to keep the Strait of Hormuz closed and two oil tankers were hit in Iraqi territorial waters, moving oil prices higher to finish the week. Brent futures (international oil market) closed above $100 per barrel for the second day in a row, Friday. Brent futures gained about 10% for the week. It follows the 27.9% rise seen last week – the biggest weekly gain in oil prices since the Covid-19 pandemic in 2020. The U.S. crude oil market, WTI, gained more than 3% on Friday but finished under $100 per barrel.
Higher oil prices are causing concern among investors we are being pushed into ‘stagflation’ – high inflation, low growth economic conditions.
Turning to corporate earnings, Oracle is back in the spotlight as their Q3 earnings report, and 2027 revenue outlook exceeded expectations. Shares jumped as much as 14% in early trading on Wednesday. Unfortunately, the revived excitement for Oracle wasn’t enough to pull up tech sector stocks. Accprdomgt p the JP Morgan Weekly Market Recap, tech sector stocks finished the week down almost 1%.
The week ahead will likely continue to be impacted by higher degrees of volatility in the energy markets. A Fed meeting Wednesday and press conference with Fed Chairman Jerome Powell will also be in focus. Investors expect the Federal Reserve Board to keep rates unchanged at 3.50%-3.75%.
What’s Ahead This Week
Economic Events
- The Federal Reserve will take center stage on Wednesday when it announces its latest interest rate decision, followed by a press conference.
- For the second week in a row inflation will have investors’ attention. This week is the Producer Price Index (PPI). This index tracks price changes at the wholesale level, anything over the expected 2.9% year-over-year increase could potentially disrupt markets.
Earnings
- Consumer retail companies across several different industries report this week and their outlook for the consumer will be in focus
- Dollar Tree
- Williams-Sonoma
- Darden Restaurants (Olive Garden, Longhorn Steakhouse, The Capital Grille, Ruth Chris, etc.)
- General Mills
- Five Below
- Carnival (cruise lines)
- Micron, manufactures computer memory and computer data storage products will be important to the AI story and tech led market
- FedEx is a key transporter of goods and their outlook, given tariff policy, will be considered by investors.
My goal is for you to feel educated and informed about variables we do and don’t have control over and find ourselves working within. I hope to do it in an informative and relatable way. As always, I value your relationship and planning objectives – my door is always open for conversation.
