Apple Watch event and Greek debt drama are worth watching Monday morning

Apple Watch event and Greek debt drama are worth watching Monday morning

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Traders will be seeking additional signs next week to bet that a Fed rate hike is likely to come earlier than many expect, with U.S. retail sales predicted to gain in February for the first time in three months.

A rebound in retail sales could show lower oil price helped encourage consumers to spend, but analysts say spending in February took a hit from unusually harsh weather across much of the country.

Friday’s better-than-projected jobs report increased hopes of a U.S. rate increase as soon as June, leading declines in the market.

The S&P 500 closed the week below its March 2 closing record high by more than 2 percent, while the Nasdaq was down 70 points from the 5,000 milestone, which it marked last week for only the third time in history and for the first time in fifteen years.

Comments from some Fed officials led many to believe that a June rate hike is impending. Richmond Federal Reserve President Jeffrey Lacker was one of them as he made no change in his view that the Fed should raise rates in June.

“The Fed is back at the top of the circle” in terms of the investor focus, said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

“I think they’re feeling some pressure to show that they really are data driven. The economy has been getting better, and what I think they’re trying to do is overstay the party to make sure the economy really is better.”

In the February’s jobs report released Friday, the unemployment rate declined to a six-year low of 5.5 percent last month, within the status that the Fed term full employment.

NP writes: “The current unemployment rate (5.5%) has now breached the upper bound of the FOMC’s latest central tendency for the long-term unemployment rate (or non-accelerating inflation rate of unemployment) of 5.2-5.5%. This is a significant move that will put pressure on the Committee to lay the groundwork for higher rates soon.”

While a stronger U.S. economy offers the best long-run prospect for the U.S. stock market, investors are showing concerns that if the Fed increases rates too soon, it could put the brakes on its slow-growing economy.

Also on the roster is the University of Michigan’s preliminary March reading on consumer sentiment. The index turned lower in February from 11-year high, raising fears about spending.

Apple, closed higher Friday after S&P Dow Jones Indices declared the stock is going to be added in the blue-chip index in March, will stay in headlines next week when it is projected to launch the long-awaited Apple Watch in San Francisco on Monday.

Also on Monday, the European Central Bank is expected to start its one-trillion-euro spur program, as part of its plan to jump-start the struggling euro zone economy by buying bonds.

That may bring more volatility, said Jeff Carbone, managing partner at Cornerstone Financial Partners in Huntersville, North Carolina.

“You look around the world and you’ve got a deflationary” environment in many countries, he said. “A rise in interest rates is knocking at the Fed’s door, but there still doesn’t seem to be enough strength out there to make it happen.”

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