The release of better than expected Chinese PMI data overnight has been sufficient to inject some renewed confidence into US equities. The threat of a global economic slump which we saw build last week appears to be abating and whilst the year ahead may not see rampant growth, there’s growing conviction that the worst case scenario can be avoided. That said, with a data heavy week ahead, including the release of several critical US metrics, this optimism could yet prove short lived.
US Retail Sales for February are set for release ahead of the opening bell. Whilst much of the recent economic malaise has focused around concerns of a global economic slowdown there are also worries that US consumption may be tumbling. Readings such as this, plus Friday’s average wage growth print, will be closely followed as they could provide further evidence as to the outlook for the domestic economy.
In the short term there may be a fresh swathe of optimism, but it’s worth bearing in mind that this confidence is being driven by just one economic reading. Ahead of the open we’re calling the DOW up 166 a 26095 and the S&P up 18 at 2852.
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Economic acceleration a powerful tailwind for stocks, but could turn less inspired in a week that promises no shortage of "rock the boat" type inflation data