The week of truth for U.S. stock indices

The coming week will be dominated by several market-moving events, with the Federal Reserve's monetary policy meeting, April's jobs report and earnings from Apple on the agenda.

Trade talks between the United States and China will also keep investors on their toes this week, as Treasury Secretary Steven Mnuchin and other members of the Trump administration head to Beijing.

Elsewhere, in Europe, investors will await the first estimate of euro zone inflation figures to assess how fast the European Central Bank will start unwinding its asset purchase program in the wake of last week's dovish ECB meeting outcome.

Meanwhile, in the UK, traders will focus on a trio of reports on activity in the manufacturing, construction and services sectors for further hints on the health of the economy and the likelihood of the Bank of England raising interest rates this year, especially after last week's dismal GDP report.

1. Apple Highlights Another Busy Week Of Earnings

On Wall Street, more than one-fifth of the S&P 500 companies release earnings, with most of the focus falling on tech bellwether Apple (NASDAQ:AAPL) due after Tuesday's closing bell.

The iPhone-maker's stock has been slammed in recent weeks due to worries over slowing phone sales and is now down more than 4% for the year and more than 10% from its all-time high.

McDonald's (NYSE:MCD) and Loews (NYSE:L) on Monday, Merck (NYSE:MRK), Pfizer (NYSE:PFE) and Snap (NYSE:SNAP) on Tuesday, Tesla (NASDAQ:TSLA), Square (NYSE:SQ), Spotify (NYSE:SPOT) and Mastercard (NYSE:MA) on Wednesday, CBS (NYSE:CBS) and Blue Apron (NYSE:APRN) on Thursday, and Alibaba (NYSE:BABA) on Friday are among the dozens of others reporting.

U.S. stocks ended the past week flat to lower, after a week of wild gyrations. The S&P 500 ended barely changed, while the Dow and the Nasdaq lost 0.6% and 0.4% respectively.

2. Federal Reserve Rate Decision

The Federal Reserve is not expected to take action on interest rates at the conclusion of its two-day policy meeting at 2:00PM ET (1800GMT) on Wednesday, keeping it in a range between 1.5%-1.75%.

The central bank will release its post-meeting statement as investors look for any hints on how it views inflation and the economy.

The majority of economists believe the Fed will hike rates at its next meeting in June, followed by another hike in September, with a third move higher arriving in December.

Investors will have their eyes on the dollar and on interest rates after the greenback enjoyed its best week since November 2016, while the U.S. 10-year Treasury yield broke through the psychologically significant 3%-level for the first time in over four years.

3. Euro Zone Flash Inflation

The euro zone will publish flash inflation figures for April at 0900GMT (5:00AM ET) Thursday, which are likely to lend support to the European Centrals Bank's decision not to rush stimulus withdrawal. The consensus forecast is that the report will show consumer prices rose 1.3%, after rising at a similar rate in March.

4. UK PMI's

The UK will release readings on April manufacturing sector activity at 0830GMT (4:30AM ET) on Tuesday, followed by a report on the construction sector on Wednesday and the services sector on Thursday.

The manufacturing PMI is forecast to dip to 54.9 from 55.1 a month earlier, construction activity is expected to strengthen to 50.9 from 47.0, while a survey on Britain's giant services sector is forecast to improve to 53.3 from 51.7.

Britain's economy grew at its slowest pace since the fourth quarter of 2012, data showed on Friday, prompting investors to slash their bets on a Bank of England rate rise next month.

5. U.S. Jobs Report

There's a gusher of economic reports in the coming week, as the calendar rolls to May from April, with the monthly employment data in the spotlight.

The U.S. Labor Department will release the nonfarm payrolls report for April at 8:30AM ET (1230GMT) on Friday, and it will be watched more for what it says about wages than hiring.

The consensus forecast is that the data will show jobs growth of 185,000, after adding 103,000 positions in March, while the unemployment rate is forecast to dip to 4.0% from 4.1%.

However, most of the focus will likely be on average hourly earnings figures, which are expected to rise 0.2%, following a gain of 0.3% a month earlier. On an annualized basis, wages are forecast to increase 2.7%, the same as the rise seen in March.

Source: Bloomberg Pro Terminal

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