Last week brought increased volatility with growth stocks taking significant hits, particularly in AI and tech names. The S&P 500 SPY pulled back from recent all-time highs as traders reassessed valuations in high-growth sectors, with market attention focused on NVIDIA’s earnings and inflation data.

Here are 5 things to watch this week in the market.

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Jobs Report and Fed Signals

Friday’s Nonfarm Payrolls report at 8:30 am will be this week’s most significant market event. Following recent mixed signals about labor market strength, this report takes on additional importance. Traders will focus not only on the headline jobs number and unemployment rate, but particularly on Average Hourly Earnings as a gauge of wage inflation. With the report coinciding with Fed Chair Powell’s testimony and the Fed Monetary Policy Report, this combination could significantly impact rate cut expectations. Any signs of cooling in the labor market might revive hopes for earlier Fed easing, while continued strength could further delay rate cut timelines.

Manufacturing and Services Data

The week kicks off Monday with key manufacturing indicators including Manufacturing PMI and ISM Manufacturing PMI at 10 am. Manufacturing has shown signs of contraction in recent months, and these reports will provide fresh insights into whether the sector is stabilizing or deteriorating further. Wednesday brings the Services PMI and ISM Non-Manufacturing PMI, offering a more comprehensive view of economic activity. Given that services drive the majority of economic growth, any significant deviation from expectations could impact broader market sentiment about economic health.

Tech Sector Momentum

Following recent volatility in technology stocks, this week brings several important tech earnings reports that could influence market sentiment. CrowdStrike CRWD reports Tuesday, while Marvell Technology MRVL releases results Wednesday. Thursday brings highly anticipated earnings from Broadcom AVGO, a key AI infrastructure player. After NVIDIA’s recent report moved markets, these earnings could either amplify concerns about high-growth stock valuations or help stabilize the tech sector if results and guidance exceed expectations.

Fed Beige Book and Powell’s Testimony

Wednesday’s Fed Beige Book release will provide qualitative insights into economic conditions across different regions. This report often offers nuanced perspectives on inflation pressures, hiring trends, and business sentiment that go beyond quantitative data. Combined with Fed Chair Powell’s testimony on Friday, these events will give traders valuable context for assessing the Fed’s likely policy path. Powell’s comments will be particularly scrutinized for any shifts in tone regarding inflation concerns or the timing of potential rate cuts.

Retail Sector Health

Target TGT reports earnings on Tuesday, followed by Costco COST on Thursday. These reports come at a critical time for gauging consumer spending trends and retail sector health. With recent mixed signals from retailers about consumer behavior, these earnings reports will provide fresh insights into spending patterns across different consumer segments. Target’s commentary on discretionary spending will be particularly watched, while Costco’s membership trends could offer perspectives on consumer sentiment in the current economic environment.

Best of luck this week and don’t forget to check out my daily options article.

On the date of publication, Gavin McMaster had a position in: SPY . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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