Rate Clues, AI Momentum & Retail Trends: What Will Drive Markets This Week?

Fed Decision, Powell’s Remarks, and Key Earnings in Focus This Week

Traders are bracing for a pivotal week as the Federal Reserve is set to announce its latest interest-rate decision on Wednesday. Markets widely expect the Federal Open Market Committee (FOMC) to keep rates steady at 4.25% to 4.50%, marking the second consecutive meeting without a change. Investors will closely analyze the Fed’s “dot plot” projections and Fed Chair Jerome Powell’s press conference for insights into the central bank’s outlook on inflation, growth, and potential policy shifts.

Meanwhile, February retail sales data, due Monday, will provide fresh insights into consumer spending trends after a sharp decline in January. Several major earnings reports—including those from Nvidia (NVDA), Nike (NKE), Micron Technology (MU), and FedEx (FDX)—are also set to drive market sentiment.

Fed Poised to Hold Rates; Market Watches for Powell’s Tone

According to the CME FedWatch tool, traders have priced in a near certainty that the Fed will keep rates unchanged. The dot plot, which outlines policymakers’ expectations for future rate moves, will be a key focus. Economists at Wells Fargo anticipate no changes to the median projection for 2025 but caution that Powell’s remarks could hint at potential adjustments if inflationary pressures resurface.

Powell’s press conference will also be closely scrutinized, particularly for any commentary on the Biden administration’s tariff policies and their potential impact on inflation and economic growth. Market volatility could increase if Powell signals concerns over policy uncertainty or weakening consumer resilience.

Retail Sales and Housing Data Could Signal Economic Trends

February’s retail sales report will be a critical data point for assessing consumer strength. A 0.9% decline in January raised concerns about a potential slowdown, but economists at Jefferies suggest that consumer spending remains robust for now. A stronger-than-expected rebound in February could reinforce confidence in economic stability, while a weak reading may fuel recession fears.

The housing sector will also be in focus with several key reports, including homebuilder confidence, housing starts, and existing home sales. Rising construction costs due to tariffs on steel and aluminum could impact builder sentiment and supply, influencing home prices and sales activity.

Nvidia’s GTC Conference and Major Earnings Reports on Deck

Tech investors will be watching Nvidia’s annual GTC conference on Tuesday, where CEO Jensen Huang will address the growing demand for AI chips. The company faces competition from emerging Chinese AI firms, adding pressure on its outlook.

Micron Technology will report earnings Thursday after lowering revenue projections due to weak PC demand and sluggish auto and industrial sales. Nike’s earnings, also set for Thursday, will be a key test for consumer spending trends, particularly after the company’s strong results last quarter. FedEx’s earnings could provide insights into global trade and logistics, especially as the company prepares to spin off its freight business.

Market Outlook

With the Fed expected to hold rates steady, the market’s focus will shift to Powell’s tone and economic projections. A cautious or dovish stance could support equities, while any hawkish surprises may trigger market jitters. Retail sales and housing data will also shape sentiment, offering clues on consumer strength and economic momentum. Traders should prepare for potential volatility as the Fed’s decision and key earnings reports unfold.

More Information in our Economic Calendar.