The week is packed with events that could shake up the market: Super Tuesday, the jobs report, and Federal Reserve Chair Jerome Powell's Capitol Hill testimony. These potential headwinds come after a robust earnings season, particularly driven by the Magnificent Seven.
Roundhill Investments' Chief Strategy Officer Dave Mazza joins Yahoo Finance to guide investors through the possible market volatility.
Mazza explains: "Really, the most important thing has been and will be inflation. Of course you know a big jobs report on Friday, not that folks shouldn't pay attention to that, but really, I think the main driver has been the path of inflation, and we know that it probably hasn't come down as quick as they would like to see. There's some structural issues, perhaps, that are playing a role here. For the most part, it's improved. That, I think, is a reason that's underpinned this incredible market rally whereas there are indexes across the board and markets across the board, hitting all-time highs."
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Nicholas Jacobino
Video Transcript
AKIKO FUJITA: We've got a busy week of political and economic news ahead, which might pose some headwinds for the markets, for more on what might trigger some of that volatility in the market. Let's bring in Dave Mazza, Roundhill Investments chief strategy officer. Dave, good to talk to you today. So we've got Super Tuesday on tap tomorrow. You've got Fed Chair Jerome Powell testifying before congress. And then of course, all of it leading to that all important jobs report on Friday.
What is the potential, do you think, to move the most?
DAVE MAZZA: Well, it's interesting. We're coming on the heels of basically the end of earnings season. And earnings season actually was, I think more robust than folks were expecting and stronger than many were anticipating, particularly, with those magnificent seven and the mega cap stocks generating 15% year over year sales growth. We know a lot of that's coming from the really unprecedented numbers that NVIDIA has put up there.
But looking ahead, it's going to be a bit more challenging this week because it's with a dearth of corporate earnings. Now investors go right back to focusing on the Fed. Are we going to get a rate cut sooner than later? I think it's challenging because if folks are anticipating a rate cut in March, I think that's off the table. And then if we think about even May or June, how many are we going to get before the election. Because you're right, super Tuesday is here.
Nikki Haley with some interesting comments over the weekend about potentially not supporting Trump. Of course, that could just be grandstanding here. But I do think geopolitical risks are going to be increasing from investor attention. Now that we know earnings, the earnings recession is over.
AKIKO FUJITA: If it is really all about the Fed this week though, Dave, I mean, what specifically are you going to be looking for? The Fed chairs made it pretty clear that they're not comfortable moving forward with a rate cut just yet. Patience is the thing that he's talked about before. Given where expectations have moved have come down, what more is likely to move the markets based on what we hear from him on Wednesday and Thursday?
DAVE MAZZA: Yeah. Well, I think as Chair Powell has been trying to do, he's trying to be more measured and get investors to stay focused on the reality of the data. And the reality of the data is that the economy is OK. I think it's hard to say that it's strong. Some may characterize it as such. But really the most important thing has been and will be inflation. Of course, you know the jobs, big jobs report on Friday.
Not that folks shouldn't pay attention to that, but really the-- I think the main driver has been the path of inflation. And we know that it probably hasn't come down as quick as I'd like to see. There's some structural issues perhaps that are playing a role here. But for the most part, it's improved. So that I think is a reason that's underpinned this incredible market rally whereas noted, there are indexes across the board and markets across the board, hitting all time highs.
Throw in gold hitting an all time high. Bitcoin hitting close to all time highs or at least over 60,000 on the path potentially to 70,000, is that there's a lot of firepower in the market, so I think regardless of what Chair Powell says, I do think investors are going to probably absorb this week maybe take a bit of a breather but for the time being, the momentum remains behind market moving higher.