This week is special, according to John Canally, economist and investment strategist for LPL Financial (LPLA). But not in a good way.
The reason? Too many meetings and too many issues.
For instance, there’s the FOMC gathering Tuesday and Wednesday.
“Eight times per year, the outcome of the Federal Reserve’s Federal Open Market Committee meeting becomes the focal point for market participants,” Canally said in his latest outlook report issued late Monday, “Mid-Spring Surprise.”
And four times each year, headlines focus on the health of the economy in the prior quarter, as measured by the Bureau of Economic Analysis’ report on gross domestic product.
“Similarly, at the start of each month, the Report on Business from the Institute for Supply Management (ISM) and the monthly labor market report from the U.S. Department of Labor are the centerpieces of any trading week,” Canally noted.
“Only eight times in over 14 years have the FOMC meeting, GDP report, ISM report, and the employment report — all often market-moving events — occurred in the same week,” he explained. “Historically, these weeks have exhibited 20% more volatility than an average week over this time span, as measured by the S&P 500 Index.”
In addition, in such weeks, the VIX (VIX) has been 4% higher than normal. “Add in the 139 S&P 500 companies expected to report earnings, and this week is unlikely to be just another boring mid-spring week for financial market participants,” Canally wrote.
(The Fed and FOMC will make a series of announcements on Wednesday, when GDP data will also be released; on Thursday, manufacturing figures will be reported; and employment figures are set to go public on Wednesday and Friday of this week.)