First-quarter earnings season kicks off next week with several big banks reporting, and investors will be scouring the minutes from the Federal Reserve’s meeting last month.
Earnings season unofficially kicks off on Tuesday with Alcoa’s (AA) report, but much of the focus will be on banks such as JPMorgan Chase (JPM) and Wells Fargo (WFC), which release their earnings on Friday.
The minutes from the central bank’s policy-setting Federal Open Market Committee are out on Wednesday and investors will be parsing the notes for clues as to when interest rates may be moving higher.
At the March meeting the Fed agreed to continue reducing its monthly bond purchases by another $10 billion and the tapering plan seems pretty much set in stone. So investors and market analysts have trained their sites on the timing of interest rate hikes.
In addition to maintaining the tapering program, the FOMC discarded a 6.5% unemployment rate threshold established more than a year ago for when the Fed might begin raising interest rates. The Fed has said it will use an array of economic indicators rather than leaning too heavily on the jobless rate.
Fed Chair Janet Yellen attempted to clarify the timing earlier this week when she said the Fed probably won’t consider raising interest rates until the unemployment rate falls to a range of 5.2% and 5.6%.
The minutes should provide further insight into how the Fed plans to balance the need for low interest rates with concerns for rising inflation.
In other data set for release next week, analysts expect a slight decline in the Reuters/University of Michigan consumer sentiment index from 80.0 to 79.0 as recent labor reports have been depressed by bad weather, and a precarious jobs environment always makes consumers skittish.
Meanwhile, the Producer Price Index, a key gauge of inflation, likely dipped 0.1% in March on another drop in energy prices, and despite another increase in food prices. However, the core PPI is expected to have climbed 0.2% as retail margins bounce back from a lousy February.
Both the consumer sentiment and PPI numbers are due Friday.