Weekly Market Outlook

The string of important economic and financial data releases this week starts on Tuesday with the US consumer confidence for May. On the next day, HP is expected to report its results, so investors will be carefully watching the numbers to see how the shift to work from home has affected the demand for the company’s goods. On Thursday, markets will be focused on the US gross domestic product for the first quarter, with many expecting to see a number worse than the -4.8% that the flash GDP suggested a few weeks ago. We will close the week on Friday with the April personal spending figure for the United States.

US May Consumer Confidence (Tuesday)

Consumer confidence fell sharply in April to levels last seen in September 2014. Its slide from near 20-year highs was not really a surprise. Given the current state of the global economy, many were anticipating even a harder hit. Analysts expect that in the next few months the data will deteriorate to the levels in February 2009, with the number of jobless claims having soared since the last consumer confidence reading.

HP Q2 Fiscal Year 2020 Results (Wednesday)

The fall in demand for PCs has been a tendency for quite some time now. The trend has been nearly reversed lately, mainly as a result of the coronavirus-induced shift to working from home. Last month Lenovo’s CEO said the company’s business had been working at full speed. This in turn presents a great opportunity for HP, which offers a broad range of products to meet this demand.

According to recent reports though, HP has been finding it difficult to fulfil this increase in demand, with some of its products having gone out of stock due to reported supply chain disruption, which is likely to affect Q2 numbers. Although shipments of HP in the US dropped 13.9% in the first quarter, the tech giant still accounts for about 22% of the global market. The company forecasts an annual EPS in the $2.33-$2.43 range, with Q2 EPS expectations on the lower end: $0.45.

US Q1 GDP (Thursday)

The flash Q1 gross domestic product released several weeks ago showed a 4.8% contraction of the US economy. This is quite a substantial plunge given the fact that for most of the quarter business activity was at pretty high levels. It was in the second part of March that the economy went into a state of shutdown, with jobless claims skyrocketing with about 10 million in the last couple of weeks. The preliminary GDP figure missed the data from the final weeks of March, which means that the real number will probably be revised lower. With personal spending and retail sales taking a strong blow in March, expectations are for further weakness in the GDP figure.

US April Personal Spending (Friday)

Personal spending contracted sharply to a record low of -7.5% in March. This substantial contraction had been recorded before the US economy really grinded to a halt. When the country went into lockdown as coronavirus cases started to rapidly rise in New York, there were about 10 days of March left. Analysts expect the April reading to easily beat the previous record to the downside, citing the fact that the US spent the entire month in a lockdown.