The April jobs figures and a wide range of first quarter earnings reports will ensure it is another busy week as markets enter into the month of May. Investors will also be watching appearances by Federal Reserve officials and other data, including PMIs for indications on the health of the U.S. economy as the reopening continues. In the UK, the Bank of England is expected to upgrade its economic forecasts at its meeting on Thursday and may even begin to taper the pace of asset purchases as the economy continues to rebound from its Covid-19 induced slump. Here is what you need to know to start your week.
- Bumper job gains expected
The U.S. economy is expected to have notched up another strong month of jobs growth in April with Friday’s nonfarm payrolls report expected to show 978,000 jobs created, after 916,000 jobs were added in March – the largest increase since last August. The unemployment rate is expected to tick down to 5.7% from 6%.
Data late last week showed that economic growth accelerated in the first quarter, putting the economy on track for what is expected to be the strongest performance this year in nearly four decades.
Unprecedented fiscal stimulus and easing anxiety over the pandemic, with all adult Americans now eligible for vaccination, have resulted in a faster economic rebound in the U.S. compared to the rest of the world.
- Earnings
Earnings are rebounding from last year’s pandemic-fueled lows, with results now in from more than half of the S&P 500 companies.
Dozens more companies are due to report in the coming week, with vaccine makers Pfizer (NYSE:PFE) reporting Tuesday, followed by Moderna (NASDAQ:MRNA) on Thursday.
Travel related earnings to watch include results from Hilton Worldwide Holdings Inc (NYSE:HLT) (NYSE:HLT) and Caesars Entertainment (NASDAQ:CZR), while some consumer brands are also on the schedule, including Anheuser Busch Inbev (BR:ABI) and Estee Lauder (NYSE:EL).
Some other notable earnings include General Motors (NYSE:GM), Uber (NYSE:UBER), ViacomCBS (NASDAQ:VIAC), DraftKings Inc (NASDAQ:DKNG) (NASDAQ:DKNG) and Beyond Meat (NASDAQ:BYND).
Earnings are raising some fresh questions in the debate over growth versus value. After a decade of steadily under-performing the overall market, value has been a favorite reopening bet and investors will be watching to see if this trend continues.
- Fed speakers
Fed Chairman Jerome Powell is speaking on Monday, but he is not expected to offer any fresh insights on the economy during his appearance to discuss community development at an online conference hosted by the National Community Reinvestment Coalition.
Last week Powell said the “time is not yet” to talk about tapering the Fed’s $120 billion monthly pace of bond buying.
Dallas Fed President Robert Kaplan speaks Tuesday and Thursday, while New York Fed President John Williams, Minneapolis Fed President Neel Kashkari, Chicago Fed President Charles Evans, Boston Fed President Eric Rosengren and Cleveland Fed President Loretta Mester are among Fed policy makers due to speak during the week.
- PMI data
Ahead of Friday’s all important jobs report investors will get more data to firm up their view of the health of the economy with ISM manufacturing and service reports.
The ADP’s survey of private sector hiring is due out on Wednesday followed by the weekly figures on initial jobless claims on Thursday.
While claims have dropped from a record 6.149 million in early April 2020, they are still above the range of 200,000 to 250,000 that is viewed as consistent with a healthy labor market. There were 16.6 million people receiving unemployment benefits in the first week of April.
- Bank of England meeting
The BoE could take its foot off the stimulus pedal and scale back its pace of bond purchases at its meeting on Thursday, with Britain’s economy rebounding strongly from the pandemic induced recession.
Unlike the U.S. Federal Reserve or the European Central Bank, which committed to open-ended bond purchases to support their economies, the BoE set specific targets.
Analysts are also expecting updated economic outlook forecasts, including a bigger rebound in second quarter growth and a lower peak in unemployment.
In February, the BoE forecast the economy would grow 5% this year after output slumped by almost 10% the year before, the largest drop in more than 300 years.