Fed meeting, inflation data, Apple earnings

A look at some of the major trade events and economic indicators to come this week:

With inflation high and the economy strengthening, the Fed has made clear that it is almost ready to end its bond-buying program designed to keep long-term rates low, as well as to raise short-term rates from their all-time high. When the Fed concludes its two-day meeting on Wednesday, many on Wall Street expect it to indicate that rates could start to rise in March. Higher rates would mark the end of the “easy mode” investors have enjoyed since early 2020.

Apple revenue


Apple publishes its latest quarterly results on Thursday. The tech giant alone accounts for about 6.8% of the total market value of the S&P 500. It’s gotten so big because it’s been able to turn a profit almost regardless of what the economy does in the sense large. It will have to continue to generate strong growth if interest rates continue to rise. Higher rates tend to lower the price that equity investors are willing to pay for every dollar of profit a company makes.

Inflation

On Friday, Wall Street will see what the Federal Reserve’s favorite inflation gauge says. Economists expect to see a 5.7% increase over the previous year for the personal consumption expenditure price index, or PCE. This would correspond to the level of the previous month. Many Fed policymakers expect PCE inflation to fall back toward 3% or lower in 2022.

PCE inflation, year-on-year

May 4

June 4%

July 4.2%

August 4.2%

Sep 4.4%

Oct 5.1%

Nov. 5.7%

Dec. (est.) 5.7%

Source: FactSet

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