The Federal Reserve’s latest policy announcement will be the main event for investors in the week ahead, as Wall Street looks for clues on the health of the economy and the potential for rate cuts later this year. On top of that, the latest U.S. jobs market scorecard will be released along with more mega-cap earnings. Stocks registered a winning week on Friday, with the S & P 500 snapping a three-week losing streak, and the Nasdaq Composite posting its first positive week in five. Those gains come on the back of some strong earnings results from Google parent Alphabet and Microsoft , among others, that helped offset ongoing concerns of persistent inflation. .SPX 1M mountain S & P 500 But higher inflation is increasingly weighing on the market as investors reevaluate their assumptions on what the Fed will do with interest rates. This week, the U.S. 10-year Treasury yield briefly climbed above 4.7% for the first time since November. It was last above 4.6%. Markets are now only pricing in a one quarter percentage point rate cut in 2024, the CME Group’s FedWatch tool shows. That’s down sharply from the six or seven rate cuts investors were anticipating coming into the year. “Three straight months of higher-than-hoped inflation challenges the idea that this is seasonal volatility, as Powell has acknowledged,” wrote David Alcaly, lead macroeconomic strategist at Lazard Asset Management, referencing Fed Chair Jerome Powell. “At best, it delays rate cuts. At worst, it implies the Fed needs to slow the economy.” The interest rate debate The central bank is widely anticipated to keep rates unchanged next week, but investors will parse Powell’s commentary following the meeting to see if he has turned more hawkish after the recent data. “If you’re just judging by the public speeches that we’ve heard since their March meeting, they’re likely to become incrementally more hawkish,” said Brian Nick, senior investment strategist at the Macro Institute, said of the Fed policymakers. “They’re not releasing new forecasts, but you certainly are going to hear more caution about inflation from the chairman.” A tough stance against inflation from Powell could unnerve investors who worry that higher-for-longer interest rates will cause cracks in an economy that has thus far held up. Some investors will also watch to see if the idea of rate hikes may be put back on the table. Matt Stucky, chief equity portfolio manager at Northwestern Mutual Wealth Management Company, noted the idea of a rate hike in the face of a still resilient economy is increasingly on the market’s mind. “If you’re looking at the distribution, what’s priced in, it was essentially zero that the Fed was going to raise rates to start this year. Now it’s moving up towards 20%. So it’s not just a small percentage anymore,” Stucky said. “It’s still an unlikely event, a very unlikely event in my mind, but it’s not zero.” April jobs Investors will also get an update on the labor picture next week, with the release of the April nonfarm payrolls report set for Friday. According to Dow Jones, economists expect 250,000 jobs added for the month. That would be a drop from March when the U.S. economy added 303,000 jobs. Thus far, a surprisingly resilient labor market has encouraged investors that Americans can withstand the impact of higher interest rates — as well as the spike in prices of everyday goods. But sudden cracks in the employment picture could be worrisome to investors. “Are we going to see simultaneously continued evidence that the labor market is getting a bit softer, while inflation continues to be the dominant factor driving markets day to day?” Macro Institute’s Nick said. “That’s not a particularly comfortable spot for the Fed to be in.” Corporate earnings season will also ramp up in the week ahead with a slew of consumer-facing companies set to report. Notably, mega-caps Amazon and Apple will be releasing earnings on Tuesday and Thursday, respectively. Apple has underperformed this year, off by more than 11%. Elsewhere, Super Micro Computer, the artificial intelligence beneficiary that’s up 196% this year, is set to report results on Tuesday. Week ahead calendar All times ET. Monday, April 29 10:30 a.m. Dallas Fed Index (April) Earnings: Paramount Global , ON Semiconductor, Domino’s Pizza Tuesday, April 30 9 a.m. FHFA Home Price Index (February) 9 a.m. S & P/Case-Shiller comp.20 HPI (February) 9:45 a.m. Chicago PMI (April) 10 a.m. Consumer Confidence (April) Earnings: Prudential Financial , Clorox , Advanced Micro Devices , Amazon.com , Super Micro Computer, Starbucks , Public Storage , Diamondback Energy , Extra Space Storage , Caesars Entertainment , Corning , McDonald’s , Archer-Daniels-Midland , Molson Coors Beverage , Coca-Cola , Marathon Petroleum, 3M , Eli Lilly , GE Healthcare Technologies , PayPal Wednesday, May 1 8:15 a.m. ADP Employment Survey (April) 9:45 a.m. S & P Global Manufacturing (Final) (April) 10 a.m. Construction Spending (March) 10 a.m. ISM Manufacturing (April) 10 a.m. JOLTS Job Openings (March) 2 p.m. FOMC Meeting 2 p.m. Fed Funds Target Upper Bound Earnings: Marathon Oil , MGM Resorts International , Allstate, Etsy , eBay , Qualcomm , MetLife , First Solar , Devon Energy , Albemarle , Norwegian Cruise Line Holdings , Yum! Brands , Marriott International , Kraft Heinz , Pfizer , Estee Lauder Companies , CVS Health , Generac , Mastercard Thursday, May 2 8:30 a.m. Continuing Jobless Claims (04/20) 8:30 a.m. Initial Claims (04/27) 8:30 a.m. Unit Labor Costs preliminary (Q1) 8:30 a.m. Productivity preliminary (Q1) 8:30 a.m. Trade Balance (March) 10 a.m. Durable Orders final (March) 10 a.m. Factory Orders (March) Earnings: Apple , Live Nation Entertainment , Fortinet , Booking Holdings , Pioneer Natural Resources , Motorola Solutions , Ingersoll Rand , Expedia Group , EOG Resources , Coterra Energy , Dominion Energy , Howmet Aerospace , ConocoPhillips , Moderna , Stanley Black & Decker Friday, May 3 8:30 a.m. April Jobs Report 9:45 a.m. PMI Composite final (April) 9:45 a.m. Markit PMI Services final (April) 10 a.m. ISM Services PMI (April) Earnings: Hershey
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