Week Ahead: Fed Decision, Apple Earnings, and April Jobs Report on Investor Radar

Investors are in for a busy week as May kicks off with key announcements from the Federal Reserve, Apple, and the release of the April jobs report. The week began with First Republic being seized by regulators and sold to JPMorgan Chase. On Wednesday, the Fed is expected to announce another 0.25% interest rate hike in its latest policy decision to combat inflation. Apple will release its quarterly earnings on Thursday and Friday will see the release of the April jobs report. Updates on the manufacturing and services sectors, job openings, and earnings reports from AMD, Starbucks, Ford, Pfizer, and Uber are also scheduled. Yahoo Finance will be covering the Milken Institute’s Global Conference. Markets closed resiliently at the end of April, with the tech-heavy Nasdaq rising 1.3%, but the next major test awaits with the Fed’s announcement on Wednesday.

In a note to clients on Friday, Ryan Sweet, the chief US economist at Oxford Economics, stated that the probability of the May hike being the final one in the current tightening cycle is increasing. He added that the Fed’s tightening monetary policy has exposed weaknesses in both the financial markets and the economy, which is causing stress in the banking system. This comes as economists expect the April jobs report to reveal that 180,000 nonfarm payroll jobs were added to the US economy, with a slight uptick in the unemployment rate to 3.6%. The report’s findings will be closely scrutinized for any evidence of softening in the labor market, which could influence the Fed’s decision on rate hikes in June. Apple’s Q1 earnings, set to be released on Thursday, will provide more insight into the resilience of big tech amid concerns over a potential economic slowdown. All eyes will be on the report, particularly following the losses suffered by First Republic after they lost $100 billion in deposits during March’s banking turmoil.

Investors are closely watching whether Apple’s spending has slowed down, similar to what Amazon reported last week. Additionally, investors are questioning Apple’s AI strategy with the release of new VR headsets later this year. Earnings season has provided a positive surprise for investors, with S&P 500 companies beating analyst estimates at the highest rate since Q4 2021. However, SoFi’s head of investment Liz Young notes that these beats come against unimpressive expectations that have been revised downwards this year, with margins contracting and cost pressures affecting companies. Despite this, tech earnings from Microsoft, Alphabet, and Meta Platforms have shown resilience, outweighing gloomier results seen in Amazon’s earnings. This better-than-feared picture poses a significant challenge to those remaining bearish on the tech sector, which was hit hard by aggressive rate hikes in 2022.

The upcoming economic calendar for the week includes several key events like the S&P Global US Manufacturing PMI, ISM Manufacturing, and Construction Spending on Monday, JOLTS Job Openings and Factory Orders on Tuesday, ADP Private Payrolls and the Federal Reserve Monetary Policy Decision on Wednesday, Challenger Jobs Cuts, Nonfarm Productivity, and Nonfarm Payrolls on Thursday, and finally, Labor Force Participation Rate and Average Weekly Hours Worked on Friday. The week’s earnings calendar includes notable companies like Avis Budget Group, Starbucks, Apple, and Warner Bros. Discovery, amongst others.