Stocks Set For Active Week With Big Earnings And A Big Inflation Report On Deck

Plus 5 Just-Added Strong Buys Stocks Set For Active Week With Big Earnings And A Big Inflation Report On Deck [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks Set For Active Week With Big Earnings And A Big Inflation Report On Deck [Stocks Set For Active Week With Big Earnings And A Big Inflation Report On Deck]Image: Bigstock Stocks closed modestly higher on Friday, but lower for the week. Although, the small-cap Russell 2000 finished with a small weekly gain making it two up weeks in a row. In spite of a brisk start to earnings season and plenty of economic data, last week's trading range was one of the smallest trading ranges for the S&P in nearly 1½ years. Periods of low volatility and tight ranges are often followed by periods of higher volatility and larger ranges. What might be the catalyst for that? Two things in particular are happening this week. 1) Earnings season picks up in earnest with roughly 35% of the companies in the S&P reporting this week. All in all, we'll hear from a total of 1,020 companies set to report. 2) On Friday, April 28, we'll get the Personal Consumption Expenditures (PCE) index inflation report. The PCE index is the Fed's preferred inflation gauge. And it will be the last inflation reading they'll get before their FOMC announcement next week on May 3. Earnings season is off to a solid start. And stocks typically go up during earnings season. But all eyes will be on the inflation report. The latest CPI and PPI reports both confirmed inflation is on the decline. And in part, that's one of the reasons why the Fed has reiterated their forecast for the terminal rate to get to 5.1%, which would mean just one more 25 basis point rate hike. But they have repeatedly said that they will remain data dependent. And they have acknowledged that getting inflation to 2% will take some time. Nonetheless, if inflation can continue its downward trajectory, that could give the Fed the confidence to at least pause their rate hike cycle, if not call it quits altogether. Some continue to speculate that the Fed may even cut rates later this year. I am not in that camp. In fact, the Fed has repeatedly said they do not see any rate cuts this year. But they are projecting a Fed Funds rate of 4.1% next year (which means a -1% cut in interest rates in 2024), and 3.1% the year after that (which means another -1% cut in interest rates in 2025). That's assuming inflation continues to fall. So I would not be expecting rate cuts this year. But simply ending the rate hikes should have investors cheering. Either way, Friday's PCE report will play a key role in determining what the Fed does next week. In other news, Friday's PMI Composite report came in at 53.5 with the Manufacturing Index at 50.4 vs. the consensus for 49.2, and the Services Index at 53.7 vs. the consensus for 51.5. Stocks remain near their highs for the year. And they are within striking distance of making new highs for the year. And this week could very well produce the impetus to do that. See you tomorrow, [Kevin Matras - Signature] Kevin Matras Executive Vice President, Zacks Investment Research [Why Haven't You Looked at Zacks' Top Stocks?]( Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation. [See Stocks Free »]( Most Popular Articles from Zacks.com [Buying Shares Post-Split: Good or Bad Idea?]( It's critical to remember that a split does not directly impact a company's financial position or performance. 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