Buckle up! More market excitement to come

It was a wild week for stocks last week, wasn’t it?

Major stock indexes suffered their biggest one-day losses since September 2022 on Tuesday as the Federal Reserve aggressively raised interest rates.

And then, the markets recovered most – if not all – of their losses by the end of the week.

The Nasdaq-100 index, in fact, ended the week up 0.4%. The Standard & Poor’s 500 index fell 2.4 points. The Dow Jones industrial average fell 0.6 percent, while the Nasdaq Composite index fell 0.6 percent.

It was that kind of week.

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The causes of last week’s drama were:

• Overbought stocks, especially technology stocks.
• Turmoil in Japanese markets.
• Rising tensions over the US presidential election.
• Concerns growing about the outbreak of war between Israel and Iran.
• The ongoing war between Ukraine and Russia, which helped trigger the inflationary wave of 2021 and 2022.

This week has the potential for more volatility as several important economic and earnings reports. Meanwhile, speculation will build on the August 28 report from chip giant Nvidia (NVDA) .

At the same time, talk of when or if the Federal Reserve will cut interest rates will rise this week. On August 22-24, most of the world’s central bankers will gather in Jackson Hole, Wyo., for an annual conference. Fed Chairman Jerome Powell will address the meeting and may provide a hint on rates.

It is not yet clear whether the volatility is as high as what has roiled global markets over the past week.

One indicator to watch is what’s happening with the CBOE Volatility Index, otherwise known as the VIX and sometimes called the fear index.

The VIX measures money flows from investors trying to hedge against crazy volatility.

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For much of the year, the VIX was at 12 to 14, meaning there wasn’t much investor concern that the markets would suddenly fall apart.

But as soon as stocks and tech markets began to fall, investor fear exploded and VIX levels rose. Above 30 is worrisome, but the index hit nearly 66 on August 5 as the Dow lost 1,000 points. The VIX is now back to 20, but still a little high.

(You can find a quote for the VIX here. A number of exchange-traded funds track the VIX, including the iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX) .)

So here are the keys to watch this week.

First: economic reports

The producer price index falls on Tuesday. It measures changes in July prices of goods and services produced. In June, the Bureau of Labor Statistics reported that the index rose 2.6 percent year-over-year, with services producing the most pressure on prices. The estimate for the July report is also an annual gain of 2.6%.

The consumer price index falls on Wednesday. This measure of prices paid by consumers for all expenses is expected to remain largely unchanged in July. CPI reached up to 8.6% year-on-year in May 2022 due to rising petrol prices and rising rents. Prices have come down a lot. On Saturday, AAA’s daily report showed prices had fallen 6.2 percent since hitting $3.679 a gallon on April 19.

Traders work on the New York Stock Exchange.

Michael M. Santiago/Getty Images

Retail sales, through Thursday from the Department of Commerce. That’s the ratio Wall Street is pointing to. Consensus is for a 2% increase for July from July 2023. There may be some effect from lower gasoline prices, which have declined since peaking in April. Lower gas prices mean more money to spend.

Also due: housing starts and building permits and the Michigan consumer sentiment survey, both on Friday. Housing starts await lower mortgage rates. So don’t look for a big number. The University of Michigan Consumer Sentiment Survey attempts to quantify consumer concerns. So look at that.

More economic analysis:

• 4 reasons why the worst may not be over for the market
• Today’s stock market: Stocks end higher after rollercoaster week
• Mortgage rates hit their lowest level since May 2023

Big earnings reports of the week

Second quarter earnings season has reached its peak, with most of the biggest tech companies already reporting. One exception is NVDA, which expires on August 28.

This week there are reports that can move the markets.

Home Depot (HD) drops on tuesday. The building materials retailer is expected to report $4.56 a share in second-quarter earnings, down slightly from $4.65 a share a year ago. Home Depot caters to the do-it-yourself market. But its sales to builders and contractors are huge and have weighed on the bottom line. The stock is flat this year and fell 5.3% in August.

Cisco Systems (CSCO) drops on wednesday Earnings estimate: 70 cents per share, down from $1.01 a year ago. Dow component Cisco is struggling in the age of artificial intelligence. Reuters reported that the company will soon announce thousands of job cuts. Cisco announced 4,000 job cuts earlier this year. Shares fell 6.2% in August and 10% in 2024.

Walmart Inc. (WMT) drops on thursday The retail giant is seen reporting 65 cents a share in second-quarter earnings, up from 61 cents a year ago. Walmart’s franchise of offering almost everything to a wide range of customers still works. Down 1% in August, shares up 29% in 2024.

Applied materials (lover) drops on thursday The company manufactures and services chipping equipment. Estimate: $2.01 per share, up from $1.90 a year ago. Shares have been absorbed by the decline in tech stocks since Nvidia peaked. They fell 9.9% in August after a 10.1% decline in July.

Deere & Co. (OF) drops on thursday The farm equipment maker is expected to earn $5.85 per share, down from $10.20 a year ago. Reason: Corn prices are down 16% this year. Soybeans fell 22.8%. Wheat fell by 13.6%. Shares of Deere fell 7% in August and 13.5% in 2024.

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