Summary
The Fed weighs-in this week, with a bonus this time around by way of the so-called ‘dot plot.’ The Dow Jones Industrial Average, Nasdaq, and S&P 500 have all crossed into negative territory for the year. Last week, the Dow lost 3.1%, the S&P 500 dropped 2.3%, and the Nasdaq fell 2.4%. Year to date, the Dow has declined 2%, the S&P 500 is down 4%, and the Nasdaq has lost 8%. On the economic calendar, the big day is Wednesday, with a Federal Reserve decision on interest rates and added insight from the quarterly Summary of Economic Projections (the dot plot). This data, combined with commentary from Fed Chairman Powell after the rate decision, will capture intense interest. No change is rates is expected. Turning to other data, Retail Sales start the week and will offer insight into the resilience of consumers in the face of persistent inflation. Argus forecasts headline Retail Sales will be up 4% for February on a year-over-year basis, versus 4.0% last month. For Retail Sales ex-Autos, we see a slowdown to 3.3% compared to the prior 3.7%. This report will help traders gauge if January’s sales were soft because of weather, seasonal adjustments, and a holiday spending hangover — or if January marked the start of a worrisome slowdown. Other notable data out this week includes the release of the Financial Stress Index from the Federal Reserve Bank of St. Louis (on Thursday). That is the Economic Call of the Week from Argus’ Chief Economist Chris Graja. Chris sees this indicator rising slightly for the week ended March 14, but remaining below zero and signaling a continuation of below-average stress in the financial markets. If the index was to jump above 1, that might be a sign that current stock-market volatility has broader consequences. The index is constructed from 18 weekly data series. It has become less negative since mid-February. The last time it rose above 1 was for a single week two years ago, coinciding with the failure of Silicon Valley Bank. The absolute numbers matter most. Earnings season is over. The stragglers’ list includes General Mills and Five Below on Wednesday; and Nike, FedEx, Micron Technology, Accenture, and Darden Restaurants on Thursday. Last week, inflation data moved lower. The headline CPI print was 2.8% on an annual basis for February versus 3.0% for January. Core CPI
