Things To Watch

–EARNINGS SEASON PICKS UP STEAM: Nearly one-third of the companies in the S&P 500 are scheduled to report quarterly results this week. Verizon Communications (VZ) and Cadence Design Systems (CDNS) kick things off today, followed by PepsiCo (PEP) United Parcel Services (UPS), Lockheed Martin (LMT), Tesla (TSLA) and Visa (V) on Tuesday. CME Group (CME), General Dynamics (GD), and Meta Platforms (META) are a few notable names on the schedule for Wednesday. Caterpillar (CAT), Merck (MRK), Honeywell (HON), and Alphabet (GOOGL) are among the headliners Thursday. Chevron (CVX), and AbbVie (ABBV) close out the week Friday.

–DEFENSIVE SECTOR LEADERSHIP? Last week, the S&P 500 utilities (+1.7%) and consumer staples (+1.3%) sectors were the benchmark’s top performing major groups. The relative strength of this defensive duo materialized despite U.S. Treasury yields moving higher for a third straight week. Historically, these groups tend to struggle when yields back up as their above-average dividend payouts become less attractive compared to fixed income.

–GDP and PCE: On Thursday morning, Bureau of Economic Analysis data is expected to show the U.S. economy grew at a 2.3% annualized rate in 1Q24. This would mark a deceleration from a 3.4% rate of growth in 4Q23, but be far from the sharp slowdown some economists and commentators expect at some point in 2024. On Friday morning, the personal consumption expenditures (PCE) index for March will be released. Year-over-year core PCE (which excludes food and energy and is the Fed’s preferred inflation measure) is projected to be 2.7%, down slightly from 2.8% in February.

–BANK OF JAPAN: Late Thursday night, the Bank of Japan will likely hold its policy rate steady at 0.10%, one month after implementing its first rate hike since 2007. Market participants will be listening for any indication of a timeline for additional hikes or plans for a reduction in asset purchases.