Stocks Decreasing to Start the Busy Week

U.S. stocks declining, as the markets trim a strong start to 2023 ahead of this week's host of key economic and earnings data, as well as the Fed's monetary policy decision. The Fed is expected to raise rates by a decelerated 25-bp clip, and the European Central Bank and Bank of England are anticipated to increase their benchmark rates by 50 bps. Equity news is light to begin the week, and the economic calendar is quiet today before heating up, but showed the Dallas Fed Manufacturing Index improved though not enough to escape contraction territory. Treasury yields are higher, while the U.S. dollar is ticking to the downside, and crude oil prices are declining, along with gold. Asian stocks were mixed as China returned to action following the week-long Lunar New Year holiday break, and markets in Europe also diverged amid some caution ahead of the data and monetary policy decisions.

At 12:49 p.m. ET, the Dow Jones Industrial Average is down 0.3%, the S&P 500 Index is decreasing 0.9%, and the Nasdaq Composite is dropping 1.5%. WTI crude oil is falling $1.03 to $78.65 per barrel, and Brent crude oil is trading $0.96 lower to $85.44 per barrel. The gold spot price is falling $6.10 to $1,923.30 per ounce, and the Dollar Index is ticking 0.2% lower to 102.13.

Equity news is light to begin the week that will see Q4 earnings season shift into a higher gear, courtesy of results from mega-cap stocks such as Dow member Apple Inc. (AAPL $143), Google's parent Alphabet Inc. (GOOGL $97), and Amazon (AMZN $101. Out of the 145 S&P 500 companies that have reported thus far, about 51% have topped revenue forecasts, and 69% have exceeded earnings forecasts, per data compiled by Bloomberg. Schwab’s Chief Investment Strategist Liz Ann Sonders notes in her latest article, Helpless? Recession Risks Abound, how leading indicators continue to point toward further economic weakness, making it difficult and premature to determine whether the labor market can maintain its relative strength.

With the February 1 monetary policy decision approaching, the Fed is expected to continue to downshift to a 25-basis point (bp) rate hike after following up four 75-bp rate increases with a 50-bp rise in December. However, the Fed signaled that restrictive policy will likely have to remain in place for longer and at a potentially higher "terminal rate" than expected.