The market opened Monday with a four-week rally under its belt, the best stretch of performance since November of 2015, and managed to maintain those gains despite another drop in oil prices. The European Central Bank cut rates to negative 0.40 percent on Thursday to push asset purchases higher. Employment data also continues to support market growth.
The Bank of Japan (BOJ) is scheduled to announce their latest policy Tuesday, the Fed policy statement is due out Wednesday and the Bank of England is scheduled to announce its latest monetary policy on Thursday. The three central banks are expected to leave interest rates unchanged.
The most significant news out of the Federal Reserve meeting may be the quarterly "Summary of Economic Projections," which includes GDP and Fed officials' interest rate forecasts. At the end of 2015, the majority of FOMC voting members were projecting at least three rate hikes in 2016 based on their year-end forecast of 1.25 percent or more (assuming three 25 basis point hikes). A slowdown in the pace of rate hikes has largely been priced into assets, but a June rate hike is near 50/50 odds following strong labor market data. Financials would fare the best if the Fed's forecast is hawkish, while utilities and telecom benefit from lower rates.
A slight drop in February retail sales is expected, down 0.2 percent overall and 0.3 percent ex-autos. The home builders' index for March and housing and building permits for February are all expected to show sector improvement. The consumer price index (NYSEARCA:CPI) is forecast to drop 0.2 percent due to low oil prices, but core CPI is forecast to rise 0.2 percent. Weekly unemployment claims and the latest U.S. leading economic indicators index will be released on Thursday. The University of Michigan Consumer Sentiment Index is due out Friday.
Other key data include OPEC's monthly oil market report, which lowered forecast demand for OPEC oil in 2016 by 100,000 barrels. The reduction was primarily due to economic problems in Latin America and the former Soviet Republics, as well as Europe's anemic growth rate. OPEC expects non-OPEC countries to reduce production by 700,000 barrels per day this year, but thus far OPEC has yet to announce a freeze or cut. Over the weekend, Japan reported a 15 percent jump in January machine orders, the largest one-month increase since 2003. China reported weak industrial production and slowing fixed asset investment, but Chinese shares rallied Monday on expectations of monetary easing or fiscal stimulus. European industrial production and inflation are due out later in the week.
Oracle (NYSE:ORCL), Valeant Pharmaceuticals (VRX), FedEx (NYSE:FDX), Adobe (NASDAQ:ADBE) and Aeropostale (NYSE:ARO) will all report earnings this week. Analysts are looking for growth in Oracle's cloud software and infrastructure business. On Tuesday, earnings per share (NYSEARCA:EPS) are expected to be $0.62 on revenues of $9.13 billion. Valeant Pharmaceuticals is expected to report EPS of $2.61. FedEx is expected to report EPS of $2.34 and revenue of $12.41 billion on Wednesday. Investors will be looking for information on any changes regarding the company's share buyback plan. With global logistics operations, FedEx is among the first companies to notice a change in business activity. On Thursday, Adobe is scheduled to announce EPS of $0.61 on revenues of $1.34 billion, while consensus estimates for apparel retailer Aeropostale are an EPS of $0.14 on revenues of $521.2 million.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.