Stock Market Forecast for Next Week

Market Outlook for Next Week

The Dow Jones is up strongly in another uplift of the market. Is the Omicron threat out of the way. Some investors believe so and it’s brightening the December outlook.

US Covid cases are on the rise and are rocketing in New York, New Jersey, and Massachusetts. That will get some media play as more reports of the Omicron variant make news. Hold onto your hat as we’re likely not over the negativity.

Inflation will only increase, and the daily announcements on interest increase intent by the Fed, along with persistent supply china problems is here too. The battle over the stimulus spending might get louder and result in a delay of that bill and the spending bonanza. The VIX is flashing red.

There’s no big announcements scheduled for Monday, but on Tuesday they’ll report on the trade deficit which is often bad news. The media will have fun with that. Still the ISM index was up last week.

 

Investors are so forgiving, but these weights will likely create further slide for next week in the stock markets beginning Monday.  Emotions were running high on Friday and fortunately, the trading was a shortened session, otherwise the late day fall could have been awful with many more investors panicking.

It’s likely many investors have sell orders in already for Monday, as they want to lock in their profits and not suffer the indignity of not seeing the big sell off. There are no big positive news releases expected this coming week, and the small ones will likely not be market moving. The news on the new Covid 19 variant called Omicron will dominate all newstories over the weekend and into next week.

It’s a time when Ameircans are grumpy and tired and not much else is happening.  Those news updates could coincide with the biggest story of the week — another big sell off on the Dow, NASDAQ and S&P, and perhaps all global markets.

The Omicron variant is much more infectious than the Delta variant, and so far, no Covid variants have been stopped from spreading. They are competitive and so far, Delta was the most competitive and fierce variant.  Logic says this nasty variant will spread globally. It is showing up in South African covid stats and has already reached Europe, which is struggling with yet another Delta wave.  The global restriction on travel will not be positive for economies and travel stocks are taking a beating as bookings get cancelled.

Likely next week, we’ll hear more depressing news about closures and increased health restrictions. It’s like heading back into more lockdowns. It is winter now and everyone is shopping, celebrating indoors. It was back to school and work, and the end of remote work from home, just as this variant appears. It’s a little taste of a stock market slide.

No much more than a bet, since we don’t know what news and data will appear, but another 6% decline isn’t out of the question. This will alter the 3 month and 6 month forecasts, but the 5 year long term outlook is still bullish, since we know some infrastructure money will eventually be spent.

Everyone’s been banking on the $3 Trillion social and infrastructure spending spree and if the virus spreads we might see opposition to it decline. This time of year offers fewer upward catalysts and more news about economic troubles.

Rising inflation from supply chain issues and profit warnings, the debt ceiling and government shutdown, rising interest rates in 2022, and falling consumer confidence might actually mar the Xmas shopping season. There are plenty of economic events for next week, but no earnings reports of note.

Looking Ahead at Next Week

Next week we’ll see the usual reports on the PMI index, consumer confidence index and price index, nonfarm payrolls, and us factor orders. Yet with the Omicron response overshadowing everything, the most important news will be the WHOs report on the transmissibility of that variant. Let’s hope the S. African infection numbers don’t rise, because that is a signal that many traders will act on.

Of course, increased talk of a stock market crash is also giving investors an alternative view of US picture.  Where to invest next week? Manufacturing, energy, and consumer discretionaries are hot, but probably not next week. This month, you could get a good look at some stocks to buy on the dip. Bitcoin stocks are on everyone’s radar now. With (MRK) Merck’s new pill for Covid treatments, it looks like Covid 19 is on its last legs. That should be a positive for the market.

Financials, Industrials, energy and materials stocks led the route. The health sector is the only one that bucked the trend.

Sectors dropping

Learn more about Yahoo Finance and Google Finance, and check out which companies are reporting earnings this week.

If you’re a self-directed investors using the main stock market investing resources online, you might be building more sensitivity to the short term market forecasts. Smart investors are always looking ahead to tomorrow or next week or the next month, but don’t forget the long term view.

Last week, stock futures were up on new jobs (↑916,000) and wage numbers (↑4.2%) and the market had a good week. Still some investors are in waiting mode regarding the current President’s infrastructure stimulus plan. The Republicans are not expected to pass it. So the waiting game continues.

Weekly forecast hunters are pursuing clues about the direction of the Dow Jones, S&P, and NASDAQ for specific stocks or ETF’s worth buying or those they should dump. I’d like to hear from you about which stocks you think are the most likely stocks that will jump next week and over the next 6 months.

Is a Weekly Stock Forecast Even Possible?

Day traders especially zero in on these temporal changes in stock values.  They love that volatility if they can figure it out.  For the last few weeks, there’s been a lot of uncertainty regarding the Fed stimulus package.  With it’s passing into action, that volatility might ease and we could be back to the bull market run.

You can see consistent factors in routine Monday to Friday trading, but do weeks have consistent buying patterns?  If there was, the technical guys would have said something about it by now.

But let’s face it, there’s not many professional advisors sticking their neck out about stock price predictions for 5 to 7 days from now.  If you can see how stock investors reacted last week to news, and you know the news coming, then you may be able to figure out how they’ll react next week. Next week’s price growth will likely mirror last weeks, perhaps picking up the pace.

Here’s the Top performers Today

Surprise, surprise, the top performers (from Yahoo Finance) are biotech and vaccine stocks!

This week’s stock market price surge might signal a change. The pandemic winter’s dour mood is leaving us. Retail stores are reopening and tourism is picking up vaccination numbers grow.  Airlines flights, hotel rooms and travel prices are rocketing, indicating a coming tourism bottleneck for the next 6 months at least.

Tech Stocks Still in Waiting Mode

The Dow Jones and the S&P are the market darlings right now.  NASDAQ rose about 240 points last week as tech stocks improved and Dow jumped by 600 points over that 5 day period.  Tesla, Google, Facebook, Amazon, and Apple are in waiting mode.  The OECD forecasts US GDP will double to 5.6% growth because of the stimulus hand out and vaccinations are proceeding well in the US.

What About Volatility?

The big events were consumer spending, Covid vaccinations, jobs growth, and the interpretations of Jerome Powell’s speech about interest rates, and of course the passing of stimulus relief, which many thought might never happen. Investors aren’t sure the stock market forecast looks good right now, for this week and the next 6 months.

Government bonds rates have been rising and it’s causing concerns for investors. It promotes the idea that interest rates will be on the rise. However, the economy is too fragile for interest rate rises, even with $1.9 stimulus. Some believe inflation will lose steam in the second half and perhaps set us up on the road to a market crash.

If rates rise, it could crash the housing market, creating more issues for affordability, new construction and much higher house and rental prices (supply vs demand).

If that was the cause of the recent correction, the release of the Stimulus funds package should help to get business moving again and that should shrink the bond market back down. The Fed has pronounced steady low rates for years. The economy can’t take higher rates so the talk is likely just pandemic pessimism and political propaganda (like usual).

The NASDAQ, S&P, Russell, and Dow Jones are indicating a bottoming now as the stimulus relief is appearing and as vaccinations grow fast. The more reports this week about vaccination numbers, and a reopening of local and state economies will push jobless numbers down plus ease unemployment claims.

This might be the week we see the pandemic stocks take a dive as investors move onto post pandemic stocks.

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* Note: This post on next weeks stock prices is for informational and entertainment purposes and should not be regarded as investment advice for any market transactions. Please consult with your stock and financial advisor for investment decisions.

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