Stock market faces crucial test this week: 3 questions that could decide rally's fate

There will be no rest for investors this week as they await a marquee report on the state of the U.S. labor market, along with biannual Congressional testimony from Federal Reserve Chairman Jerome Powell.

Since then, weekly jobless benefit claims have continued to show few Americans filing for unemployment benefits, fueling expectations that another blockbuster gain in jobs could be due in the data for February next Friday, which in turn could force the Federal Reserve to resort to even more aggressive interest rate hikes, according to Steve Sosnick, chief strategist at Interactive Brokers, during a phone call with MarketWatch.

What will Powell say? Investors haven’t heard from Powell since he participated in a Q&A at the Economic Club of Washington on Feb. 7. The cost of living rose 0.5% in January, the biggest increase in three months, according to the consumer-price index released Feb. 14. The annual rate of inflation, meanwhile, slowed again to 6.4% from 6.5%, but economists had expected an even larger decline. The January producer-price index and the core personal consumption expenditure index, the Fed’s favored inflation measure, also came in hotter than expected.

The fact that investors can now earn a yield north of 5% by simply buying six-month Treasury bills means stocks are now facing major competition from a far less risky asset class, according to Callie Cox, U.S. investment analyst at eToro. See: Inflation data pushed the 10-year Treasury yield above 4%. How much higher can interest rates go?

It would help if Powell could keep his mouth shut and quit trashing the market to bring it down like he said he was doing.

If democrats don’t stop this mess against retailers they will lose next election , guaranteed

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Stock market faces crucial test this week: 3 questions to decide rally's fateInvestors await a marquee report on the state of the U.S. labor market, along with testimony by Fed Chair Jerome Powell and rising Treasury yields. During his back-and-forth with private-equity billionaire David Rubenstein, Powell reiterated that signs of disinflation are emerging, although he acknowledged the journey back to the Fed’s 2% target would likely be “bumpy.” No Bueno! Well if the past is any indicator Powell gives another face ripper!
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