Market Outlook: Inflation Data and Earnings Season Take Center Stage
This week, investors will be closely watching inflation data, retail sales, and the start of Q4 earnings season for signs of the economy’s direction. The latest jobs report sparked a sell-off on Friday, with all three major averages posting back-to-back weekly losses.
Economic Calendar: Key Releases
On Wednesday, the U.S. consumer price inflation report for December will be released, accompanied by producer prices and retail sales data. These figures will provide valuable insights into the inflation picture and help shape expectations for interest rates.
Earnings Season Kicks Off
The fourth quarter earnings season is set to begin, with major banks and financial institutions reporting, including JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs, Morgan Stanley, BlackRock, UnitedHealth, and Taiwan Semiconductor.
Stock Picks: One to Buy, One to Sell
Goldman Sachs: A Strong Earnings Outlook
I believe Goldman Sachs will outperform this week, driven by its upcoming Q4 earnings report, which is expected to surpass expectations. The investment banking giant is benefiting from a rebound in IPO activity, mergers, and global deal-making, alongside steady growth in its wealth management division. With a market cap of $184.4 billion, GS stock appears undervalued, with potential upside of +15.8% to about $649/share.
Citigroup: Weak Profit and Revenue Outlook
Citigroup faces a challenging outlook, hindered by near-term headwinds, making it less compelling in the current environment. Despite CEO Jane Fraser’s restructuring efforts, Citi remains plagued by a slowdown in its consumer banking division. With a dismal InvestingPro Financial Health score of 1.9 out of 5.0, Citigroup’s prospects are weighed down by lingering macroeconomic challenges and deposit stability concerns.
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