These days, nothing short of a changing breeze in Europe is likely to shake the U.S. markets. At times like these, it's important to keep track of what events are going to move the markets besides rumors; you can get so caught up in whether or not Greece and Italy are playing nice in the latest EU summit that you lose sight of U.S. economic factors quietly chugging away in the background. Here is a list to help you of top events coming up that investors should monitor closely and be aware of. Make sure you don't fall asleep before Thanksgiving Day, look at how important Wednesday could be!
TUTORIAL: Economic Indicators
Gross Domestic Product
GDP growth is considered one of the most extensive numbers we have on the economy. A healthy GDP equals a happy economy, and lately a number above 2% is what people look for. GDP is an indicator of whether or not the US economy is currently recovering or headed towards a double-dip recession. The last GDP report, the advanced third-quarter assessment, came out quite positive at 2.5%, which sparked a rally. The latest report, set to be released Nov. 22, will take a look back at those numbers and reassess.
A weekly report on first-time unemployment filings is being released Nov. 23 that includes a four week moving average and measures the strength of the job market. For quite some time now the four-week moving average has centered on the 400,000 level, which has become a barometer for economic progress in the United States. Recently it has been flirting with that level and gotten very close, but has failed to push through. Look for a lot of optimism if the number falls below 400,000, and of course pessimistic outlooks if it slips above 410,000.
Durable Goods Orders
This report includes new orders for U.S. manufacturers for items such as cars, refrigerators and mobile phones is being released Nov. 23. In other words, goods that don't wear out and are utilized. The report is considered to be a very solid indicator of industrial production and progress. Investors care about this outcome because it tells them how busy factories are going to be in the coming months, which can be an indicator of economic prosperity or decline, jobs to come or jobs to vanish, etc. The headline report has been sluggish as of late, with the October report coming out at -0.8% (though that number is not quite as bad as some expected). Watch for investors to react positively to more expansionary numbers.
Personal Income and Outlays
This is an effective measuring tool of consumer economic strength which measures all income subtracted by personal consumption expenditures. A new report, being released on Nov. 23, will tell us how much money Americans are getting in their coffers, which is used to determine whether or not people have money to spend. The better the number in this report, the more hopeful investors become that the United States can bounce back out of its sluggishness and get shopping, thereby driving the economy up. Last month personal income increased a mere 0.1% and consumer spending 0.6%, while Core PCE (personal consumption expenditure) was flat.
The University of Michigan Consumer Sentiment Index (MCSI) measures the expectations and attitude consumers have about the U.S. economy. Final numbers are being released Nov. 23. Many economists see this as crucial due to the theory that consumer psychology can drive the economy up or down. Patterns in consumer confidence can easily sway a market if the survey comes out strongly positive or negative.
The Bottom Line
These reports, which are all set to come out the week of Nov. 21, will have a pretty big impact on the market. If you can predict - or guess - correctly what these reports will show, then you could position your stocks to profit from these events.
Justin Smith is a licensed series 3 broker with Cannon Trading Company. In addition to brokering accounts and writing feature articles for Investopedia's Financial Edge, Justin writes for the Cannon Trading 'Man vs. Markets' commodities trading commentary blog. Justin primarily watches Index futures, precious metals and energy futures.