Five Key Market Events to Watch This Week: Inflation, GDP and Major Earnings in Focus

Five Key Market Events to Watch This Week: Inflation, GDP and Major Earnings in Focus

US PCE inflation data, Federal Reserve minutes and results from Walmart and Palo Alto Networks set the tone

Investors are preparing for a holiday-shortened trading week in the United States, with several major economic releases and corporate earnings reports likely to drive market sentiment. Inflation data, US economic growth figures and minutes from the Federal Reserve’s latest policy meeting will be closely scrutinised.

Here are the five most important developments to watch.

1. US PCE Inflation Data

The Personal Consumption Expenditures (PCE) price index — the Federal Reserve’s preferred measure of inflation — will be a central focus for markets.

Expectations are for:

• Core PCE to rise 0.3% month-on-month in December, compared with 0.2% previously
• Annual core inflation to come in at 3.0%, up from 2.8%

Recent consumer price data showed inflation cooling slightly, which strengthened expectations that the Fed could begin cutting interest rates as early as June. However, a strong US jobs report earlier in the month complicated that outlook, suggesting policymakers may delay further rate reductions.

Investors will be looking for confirmation that inflation continues to trend lower towards the Fed’s 2% target.

2. US GDP Growth Figures

An advance estimate of fourth-quarter US GDP is also due this week.

Economists forecast that the US economy expanded by 2.8% in the October–December period, slowing from 4.4% growth in the third quarter.

Important themes within the GDP data include:

• Consumer spending remaining the primary engine of growth
• A narrower trade deficit supporting overall output
• Signs that economic performance remains uneven across income groups

While higher-income households and large corporations have supported activity, lower-income consumers and small businesses continue to face pressure from elevated prices and higher import costs. Artificial intelligence developments have also created volatility across several sectors, adding to investor uncertainty.

3. Federal Reserve Meeting Minutes

The Federal Reserve held interest rates steady at 3.5% to 3.75% in January, citing stabilising employment conditions and inflation that remains above target.

Minutes from the meeting, due on Wednesday, are expected to provide further insight into policymakers’ thinking.

Key issues investors will examine include:

• Whether officials favour rate cuts in the first half of the year
• How concerned the Fed remains about persistent inflation
• The significance of dissenting votes from Governors Stephen Miran and Christopher Waller

With Chair Jerome Powell’s term ending in May and Kevin Warsh nominated as his successor, markets are also assessing how leadership changes could influence future monetary policy.

4. Walmart Earnings: A Barometer for Consumer Spending

Results from Walmart will offer valuable insight into the health of US consumers.

Walmart’s strong share price performance has lifted its market capitalisation above $1 trillion, reflecting its dominant position in the consumer staples sector.

Investors will focus on:

• Holiday season sales performance
• Pricing strategies amid cost pressures
• Consumer behaviour trends, particularly among value-conscious shoppers

The results may set the tone ahead of earnings from other major retailers in the coming weeks.

5. Palo Alto Networks and the AI Security Outlook

Cybersecurity firm Palo Alto Networks is also due to report this week.

The company previously raised its full-year revenue and profit forecasts, citing strong demand for digital security solutions. Investors will assess whether demand remains resilient amid intensifying competition in artificial intelligence and cloud services.

Recent acquisitions, including Chronosphere and CyberArk Software, highlight Palo Alto’s strategy to expand its AI-driven security capabilities.

Market Outlook

With inflation data, economic growth figures and major earnings announcements all scheduled within a condensed trading week, volatility could increase. Investors will be watching closely for signs that inflation is easing, growth remains stable and corporate earnings can support current equity valuations.

This combination of macroeconomic data and company results is likely to shape global market direction in the days ahead.

Sources: (Investing.com, Reuters.com)