5 Key Developments to Follow This Week

Here are 5 key developments to follow this week. US markets will be closed on Monday.

1. Earnings Reports

Financial sector earnings during the week will include fourth quarter results from Goldman Sachs (NYSE:GS), Charles Schwab (NYSE:SCHW) and BNY Mellon (NYSE:BK) on Tuesday, followed by Morgan Stanley (NYSE:MS) and Bank of America (NYSE:BAC) on Wednesday. Big non-financial firms reporting include Procter & Gamble (NYSE:PG) on Wednesday and Netflix (NASDAQ:NFLX) on Thursday, the first of the closely watched "FAANG" companies to do so. Investors will be paying close attention to the streaming giant's plans for new content and its outlook for subscribers. The Dow ended lower on Friday, dragged down by declines in major banks, including JPMorgan Chase & Co. (NYSE:JPM) and Citigroup (NYSE:C), after earnings results raised worries over a decline in trading revenues and loan growth.

2. Test for Growth Stocks

U.S. tech and growth stocks have got off to a rough start in 2022, raising the stakes for this earnings season, as investors look for reasons to remain steadfast ahead of expected rate hikes by the Fed. As the Fed increases short-term rates, investors will keep an eye on how high longer-term U.S. Treasury yields rise. Higher yields mean a greater discount on future profits, a negative for growth stocks.

3. Central Banks

The BoJ is set to keep policy on hold and revise up its inflation forecast at the conclusion of its two-day monetary policy meeting on Tuesday. While inflation remains well below the bank's 2% target, a recent spike in global commodity costs prompted more companies to increase prices. The ECB is to publish the minutes of its December meeting, when it extended stimulus measures, on Thursday amid an ongoing debate over how best to counter rising price pressures in the bloc. Meanwhile, the Fed enters its traditional quiet period ahead of its upcoming policy meeting on Jan. 24-25.

4. US Data

It’s set to be a light week on the U.S. economic calendar, with updates on the housing sector and regional manufacturing surveys in a holiday-shortened week. The Empire State Manufacturing index is due on Tuesday, followed by data on building permits and housing starts on Wednesday. Thursday brings the Philly Fed manufacturing index, along with updates on initial jobless claims and existing home sales.

5. Chinese GDP

Data on Monday is expected to show China’s economy grew by an annualized 3.6% in the fourth quarter - the slowest rate since the second quarter of 2020, pressured by a downturn in the property sector, curbs on debt and strict Covid-19 measures. On Sunday, China's state planner called on local governments to minimize the impact from COVID-19 restrictions over the upcoming Lunar New Year holiday to help a rebound in consumption.       Source: Investing.com