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Fed chair Jerome Powell makes his first major appearance Tuesday and Thursday, when he testifies on the economy before congressional committees.
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The Fed added to market volatility in the past week, and it could again in the coming week as markets listen for clues on how Powell views inflation and what he thinks of the current rate hiking path.
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Besides Powell, there is some key data, including ISM manufacturing and PCI inflation data.
The Fed rocked the markets in the past week , and there's a risk it could do so again when Fed Chair Jerome Powell speaks for the first time to Congress.
Powell delivers his semi-annual economic testimony before House and Senate committees Tuesday and Thursday, in his first major appearances as chairman.
How he views signs of rising inflation and any clues about the pace of interest rate hikes will be important.
Powell is expected to have very similar views to former chair Janet Yellen, but he could sound slightly more hawkish, and the markets may be sensitive to that. Wall Street lore says markets always put the new Fed chairman to the test, and Powell has seen some of the rockiest markets in two years, since taking over in early February.
"We'll watch to see how quickly he gets his sea legs, at a time when the waters are choppy," said Tony Crescenzi, executive vice president and portfolio manager at Pimco.
Investors will also be watching for comments on the markets themselves, after weeks of volatility and a Fed report released ahead of his testimony that said some asset values are too high.
"One thing we know for sure is that we haven't met a Fed chairman that's been right on market timing," said Art Hogan, chief market strategist at B. Riley FBR.
But Crescenzi said the former Fed governor will try not to add to market volatility, like his predecessor. "He's been on the circuit for some time, and he understands the power of his voice and the institution's voice," he said.
Stocks finished Friday on a high note, after a week of volatile trading. On Wednesday, when the Fed released minutes from its January meeting, stocks initially surged but then reversed and fell hard on concerns the Fed will speed up interest rate hikes.
The Dow was up 347 points Friday at 25,309, and that 1.4 percent surge helped it close out the week in positive territory with a gain of 0.4 percent. The S&P 500 was up 0.6 percent for the week, at 2,747.
"It broke out of a pattern that was getting very concerning. Eight of the last 10 days, you had a reversal at the end of the day," said Hogan.
Hogan said the market also ended sharply higher for the second Friday in a row despite the fact traders see concerns and might normally want to flatten out positions before a weekend.
The market is worried about inflation, rising bond yields, and the fact the Fed could make a mistake by moving too quickly to raise interest rates, he said. "At the moment, any one of them could roll over equities," according to Hogan.
Treasury yields were lower at the end of the past week, with the 10-year at 2.87 percent, well below the 2.95 it hit earlier in the week. Markets have been eyeing the yield, with many pros expecting it to reach 3 percent, a psychological turning point that could be a negative for stocks.
Economic data in the coming week could also be important, particularly ISM manufacturing and personal income and spending data. Both are released Thursday, and the PCE data includes the important inflation index that the Fed monitors most.
Signs of rising inflation, first in wages in January's employment report, then in CPI, have helped feed a quick move up in bond yields and volatile selling in stocks. The fear is that inflation will pick up enough to encourage the Fed to raise interest rates even more than the three rate hikes it forecast for this year. Inflation could also eat away at corporate profit margins.
Many economists are already forecasting four hikes, with the first of the year in March, and markets have been adjusting to that view. The Fed releases new forecasts for inflation and the economy after its March 21 meeting.
There are also a small flurry of earnings, especially from retailers, as earnings season winds down. On Tuesday, Macy's releases earnings Tuesday; Kohl's and Nordstrom report Thursday; and JC Penney reports Friday.
What to Watch
Monday
Earnings : Dean Foods DF , Luxottica, Fitbit, FIT Oneok, Palo Alto Networks, Tenet Healthcare, THC Scripps Network Interactive
8:00 a.m. St. Louis Fed President James Bullard
10:00 a.m. New home sales
3:15 p.m. Fed Governor Randal Quarles
Tuesday
Earnings: Macy's M , Toll Brothers, TOL Discovery communications , AutoZone, SeaWorld, Steve Madden, Sempra Energy, Booking Holdings, Workday, Axon, Square, EOG, Range Resources, Hertz Global, Etsy , Weight Watchers, Tesaro
8:30 a.m. Durable goods
8:30 a.m. Advanced economic indicators
9:00 a.m. S&P/Case-Shiller HPI
9:00 a.m. FHFA home prices
10:00 a.m. Consumer confidence
10:00 a.m. Fed Chair Jerome Powell testifies before House Financial Services Committee on economy
Wednesday
Earnings : Mylan, Salesforce.com , L Brands, Ambac Financial , Hostess Brands, Monster Beverage
8:30 a.m. Q4 GDP (2 nd reading)
9:45 a.m. Chicago PMI
10:00 a.m. Pending home sales
Thursday
Monthly vehicle sales
Earnings: A-B InBev, Nordstrom , American Outdoor Brands, Kohl's, Sotheyby's, VMWare, Gap, WPP Group, Barnes and Noble , Pinnacle Foods, Best Buy, AMC Networks
8:30 a.m. Jobless claims
8:30 a.m. Personal income and spending
8:30 a.m. Core PCE prices
9:45 a.m. Manufacturing PMI
10:00 a.m. ISM manufacturing
10:00 a.m. Construction spending
10:00 a.m. Fed Chair Powell testifies before Senate Banking Committee
11:00 a.m. New York Fed President William Dudley in Brazil
Friday
Earnings: JC Penney , Foot Locker, JD.com
10:00 a.m. Consumer sentiment
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