According to UBS, there is keen anticipation for this week’s economic data releases to bring forth some positive updates.
A robust earnings season has been the driving force behind the ongoing market rally in 2024, with the Dow Jones Industrial Average achieving yet another record close on Monday afternoon.
Mark Haefel of UBS acknowledges that the rally has been sustained thus far by “healthy economic fundamentals and profit growth,” but cautions that its continuation is not guaranteed.
“Inflation data this week could help determine whether market confidence in the health of the US economy should mount further,” he noted.
“We will be looking for further evidence of slowing US inflation and resilient economic growth before concluding markets should price in a ‘Goldilocks’ scenario rather than a soft landing.”
Traders will also closely monitor January’s retail sales data, scheduled for release on Thursday morning, to gauge the vigor of the U.S. consumer.
Haefele said, “The S&P 500 is now trading close to the 5,000 level where we would expect it to end the year in the event of a soft landing.”
“To reach our upside outcome of 5,300 by the end of 2024, we would need to see further positive signs on inflation, Fed policy, and growth, including from data and earnings releases this week,” he further elaborated.
