Market Direction Week of June 13, 2016

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Last Week Review: Stocks hit fresh 2016 highs on Wednesday but fell Thursday and Friday, ending flat for the week. Interestingly, the price of oil followed a similar pattern, hitting year-to-date highs midweek, just to give most of these gains back later in the week. While stocks fell Thursday and Friday, bond prices were higher as the World Bank lowered its global GDP forecasts. This report, along with nervousness around the looming "Brexit" vote, may result in choppy stock returns. But remember, bond prices tend to go up when stocks decline. By owning bonds in your portfolio, you may experience smoother returns over time, making it easier to stay invested if volatility in the stock market increases from here.

As always, the Fed will continue to state that any action they take will be consistent with improving employment and inflation data, so a weak June payroll report (due to be released on Friday 7/8/16) could derail their July plans just as quickly as the May report deflated expectations for June.

How the market finished last week, the S&P 500 down 0.1%, the Nasdaq down 1.0%, and the Dow down 0.3%.

This Week: The SPX made a gallant run at a new high but faltered a few points short of the goal. Rising volatility indicates some uncertainty about next week’s FOMC meeting, but the markets say there will be no hike.

While there is virtually no chance the Fed will raise interest rates next week, Janet Yellen does have a pretty good record of moving the markets higher when she speaks and that will happen at 2:00 PM ET on Wednesday (6/15). With Retail Sales, CPI and the Fed, there will be plenty of catalysts to cause intraday volatility too. But as you can see below, most of the changes this week were in a more bearish direction and the S&P 500 has stalled on its run toward a new high.

Economic Calendar: Retail Sales (6/14), PPI-FD (6/15), FOMC Forecast (6/15), Consumer Price Index (6/16), Philadelphia Fed Business Outlook Survey (6/16)

Some of the major earnings announcements on deck: ORCL, SONC, MPAA, LEN, KR.

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