INVESTORS enjoying near-record levels for major stock indexes will scrutinise housing data and other economic indicators this week for hints about the timing of US interest rate hikes to see if the rally will continue.
Concern about the Federal Reserve’s path of rate increases and the soaring US dollar have resulted in big swings in the S&P 500 on a daily basis, even though overall expectations for volatility remain low.
Bolstered by reduced expectations of approaching rate hikes, the S&P 500 and Nasdaq Composite came close to record closing highs on Friday. That makes coming economic updates all the more important, strategists say, including February new home sales tomorrow and February durable goods orders on Wednesday. With Wall Street bracing for the first Fed rate hike since 2006, the S&P 500 on average this year has fluctuated 24 points per session, its most volatile since December 2011, according to Thomson Reuters data.
After US consumer prices in January fell their furthest in six years due to low gasoline prices, tomorrow’s February Consumer Price Index is expected to be up 0.2 per cent.
The US economy’s growth prospects and the outlook for rate hikes have also been clouded by the strong dollar. The greenback’s 20 per cent surge over a year has caused about 50 companies to reduce earnings expectations for the first quarter, and more could be on the way.