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Top 5 Major Issues to Check in the Markets for the May 24 Week

In the week starting from May 24, 2021, the volatility in the market is expected to remain high. This is mainly because of the continued rollout of vaccines as well as the reopening of the economy. Though the earning season is coming to a close, some retailers haven’t released their results yet. Governor Lael Brainard is yet to address a conference on virtual cryptocurrencies. In fact, the policymakers of the Federal Reserve are yet to deliver some speeches.

By keeping all these aspects in mind, here are the 5 major issues that you should check in the coming week if you are a financial investor/trader:

Both Nasdaq Composite and the S&P 500 (having mostly technological stocks) are down by 3.5% and 0.6% respectively from the beginning of May until now. The Dow Jones Industrial Average, on the other hand, has increased by around 1% since the month of May 2021. The fear of inflation is trumping growth.

The traders are concerned about the future direction of Fed policy as the inflationary risks increase. Last week Fed suggested that some policymakers were ready for discussions about curtailing stimulus by cutting down bond purchases.

Sylvia Jablonski, chief investment officer at Defiance ETFs, has said:

“Investors need to change their minds and understand that technology is a longer-term market. They are unlikely to see a 20% increase in Apple (NASDAQ: AAPL ) in the next two months.”

Analysts are expecting that the traders will continue their rotation from growth stocks to yield stocks as the economic recovery takes hold.

2. The Direction Bitcoin (BTC) Price Takes

Bitcoin (BTC), the largest cryptocurrency in terms of market capitalization, has extended loss even on Friday (May 21, 2021). This drastic downfall in BTC prices took place mainly because of the Chinese officials announcing that they will crackdown on Bitcoin mining as well as trading activity. Chinese industry bodies had tightened the crypto services ban on banks as well as payment companies.

On May 20, 2021 (Thursday), the US Treasury Department separately called for new rules so that a large number of cryptocurrency transfers get reported to the IRS (Internal Revenue Service). In fact, the Federal Reserve has flagged the risks posed by the cryptos to the country’s financial stability.

The Bitcoin price reached an ATH in mid-April to near the US$65,000 level. Last week on Wednesday, the BTC price plunged to the US$30,000 level. However, since then it has recovered a bit and is now hovering around the US$40,000 level.

3. Quarterly Results to be Announced

Some retailers including Best Buy Co Inc (NYSE: BBY), Nordstrom Inc (NYSE: JWN), and Costco Wholesale Corp (NASDAQ: COST) are yet to release their earnings report.

Other corporates reporting their results are:

4. Economic Data

In the week starting on May 24, 2021, the most important economic data to watch over is the personal income and expenditure data that includes the Personal Consumption Expenditure Index (PCE). It will be released on Friday.

The core PCE index (excluding food and energy) is the preferred inflation measure of the FED so that they can keep a tab on their flexible average inflation target of 2%. In the 12-months to March 2021, it increased to 1.8%.

On Tuesday, the data consisting of consumer confidence, house prices, and new home sales will be released. On Thursday, the data for durable goods orders and initial jobless claims will be released.

5. Fed Stakeholders

On Monday, Fed governor, Lael Brainard, will address CoinDesk Virtual Conference on Digital Currencies At Consensus. His comments will be especially important considering the recent volatility in the cryptocurrency market. The president of the Atlanta Fed, Raphael Bostic, and the president of the Kansas City, Fed, Esther George, will both speak elsewhere on Monday.

On Tuesday, Fed Vice Chairman Randal Quarles will testify before the Senate Banking Committee on the Fed’s supervision and regulation of the financial system.

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