The Week Ahead on Wall Street

Economic Data

Today, the US Treasury releases data on the federal budget for March, including the deficit. Last March the government reported a $119 billion shortfall. That figure is expected to be wider given the impact from a year of the Coronavirus.

On Tuesday, the NFIB Small Business Optimism Index for March, Core CPI for March, and the Consumer Price Index for March will be released. This index tracks the prices consumers pay for goods and services. It rose 0.4% last month as the price of gasoline increased. Investors will be paying close attention to any signs of inflation as the US economy begins to emerge from the COVID-19 pandemic.

On Wednesday, the Import Price Index for March will be published. The Federal Reserve will also release its Beige Book report. The Beige Book is published eight times per year and provides insight into the economy based on data from the Federal Reserve’s 12 regional banks. February’s report showed the economy expanded, but only modestly. Investors will be looking to see if growth picked up since then.

Lots of economic data will be released on Thursday, including March Retail sales, the Philadelphia Fed Manufacturing Index, and the Empire State Manufacturing Index. Initial jobless claims will also be published. For the week ended March 27, initial jobless claims unexpectedly increased to 719,000 from 675,000. Investors will be looking to see if that was a one-off or part of a broader trend. Also Thursday, the Department of Labor releases continuing jobless claims, which is the number of individuals already collecting unemployment.

On Friday, the March Consumer Sentiment Index will be released. The Commerce Department will report housing starts for March on Friday, which is a key indicator for the state of the economy. In February, housing starts fell to a six-month low amid a country-wide cold snap. Investors will be parsing the March report to see if that was a temporary setback. Tight inventory and demand for big houses were driving growth prior to the pullback.

Earnings Reports

Today, Aphria (APHA) reports earnings. The Canadian producer and distributor of cannabis is merging with rival Tilray (TLRY) in a nearly $4 billion deal. Aphria’s stock has more than doubled since the beginning of 2021, benefiting from states’ moves to legalize medicinal and recreational marijuana. In late March, New York became the 16th state to legalize cannabis.

On Wednesday, a handful of large banks report their latest results. JPMorgan (JPM) and Wells Fargo (WFC) are two of them. Many customers were frustrated last month after the banks said they wouldn’t distribute stimulus checks until the official release date. Some of their fintech rivals were quicker to distribute checks. Shares of JPMorgan are up in 2021 despite the backlash, with the stock setting an all-time high last month. With the economy on the mend, interest rates rising slightly, and growth returning, bank stocks are generally performing well.

Also look for Goldman Sachs (GS) to report quarterly earnings on Wednesday. The Wall Street investment firm is entering the Bitcoin market. Goldman Sachs’ private wealth management unit will soon let clients with portfolios of at least $25 million invest in Bitcoin. The bank said it will roll out investment options during the second quarter.

On Thursday, Taiwan Semiconductor Manufacturing Co Ltd. (TSM) will report its earnings for the quarter. The semiconductor contract manufacturer’s business is surging amid a global chip shortage. Demand for computers and consumer electronics skyrocketed during the pandemic, resulting in a supply-demand imbalance. In response, TSMC plans to invest $100 billion by 2025 to expand capacity. The move by the world’s largest contract chip manufacturer comes a few days after Intel (INTC) said it will spend $20 billion on increasing manufacturing capacity.

On Friday, Kansas City Southern (KSU) will hand in its report card. It may be the last earnings report for the rail operator as a standalone company. Kansas City Southern was sold to Canadian Pacific Railway in January for $25 billion in cash and stock. The acquisition, the largest so far in 2021, would create the first railroad network running between the US, Mexico, and Canada.

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