The Fed and 2 others things to watch in the stock market next week

Interest rate hikes are due to be announced and a handful of notable earnings reports will be released. And is the booming energy sector starting to fizzle?

All the major averages are off the highs of Friday morning and are on the path to ending the week in the red.
Here’s a look at stocks today and three things to watch next week that could move the stock market, starting with the Federal Reserve.

Ending a down week

At the time of this writing Friday afternoon, the Nasdaq Composite is down 2.71%, while the S&P 500 and Dow Jones Industrial Average (DJIA) are down 2.06% and 1.29%, respectively.
Energy was again the best-performing sector this week, up 2.81%, followed by utilities and then materials.
Tech and financials led the markets on Wednesday after several down days, with US stocks surging as oil prices pulled back sharply after the United Arab Emirates (UES) suggested it could increase oil output.
President Joe Biden on Tuesday said the US will ban Russian oil imports in response to Russia’s invasion of Ukraine. The United Kingdom said it will phase out its reliance on Russian oil imports by the end of the year, while the European Union said it will also wean itself off of Russian fossil fuels.
Individual investor sentiment remained largely bearish for the week, with 46% of investors taking a negative stance on the short-term outlook of the market. In comparison, only 24% this week had a bullish outlook.
As we look to next week:

1. The Fed finally meets

The long-awaited meeting of the Federal Open Market Committee (FOMC) is slated to take place Tuesday and Wednesday. Members are expected to decide on just how much of a rate hike will be necessary to kick off the Federal Reserve’s initiative to reel in surging inflation.
The Consumer Price Index, the most widely used measure of inflation that tracks a wide-ranging basket of goods and services, rose 7.9% in February. Food, housing and gas costs pushed inflation to the highest level since 1982.
Federal Reserve Chair Jerome Powell met with the Senate Committee on Banking, Housing and Urban Affairs last week, saying he sees interest rate hikes coming at this FOMC meeting despite the events in Ukraine.
He said he’ll back a quarter-point rate increase but acknowledged that a rate increase above 25 basis points would be considered if inflation fails to ebb this year.
Surging inflation, exacerbated by the Ukraine conflict, and impending interest rate hikes have kept investors on edge for months. Both are investors’ top two concerns, according to a recent survey by Investopedia.
Concerned about how next week’s rate hike could affect your portfolio? See our guide to sectors and stocks that guard against higher rates.

2. Is the energy sector topping out?

Oil prices took an unexpected turn this week, with West Texas Intermediate (WTI) falling more than 14% midweek and Brent Crude dropping 15%.
The sharp pullback dragged down the energy sector, which has been the best-performing market sector by far in 2022 and over the past year. Energy is up about 38% year to date and about 46% over the past year.

On Tuesday, the S&P 500 Energy Sector Index topped $606.95 but fell 7.5% over the next 24 hours. The move came amid signals of possible progress in ramping up oil production globally, with the USE saying Wednesday that it wants to increase oil production and will encourage the Organization of the Petroleum Exporting Countries (OPEC) to boost supply.
Supply disruptions stemming from Russia’s invasion of Ukraine are sending the energy sector on a wild ride, and investors want to know if there’s anything left in the tank.
Market analyst Jon Najarian told Scott Wapner during CNBC’s “Halftime Report” Friday afternoon that he sees continued growth in the energy sector through at least the first half of 2022.
“I think all energy goes up for basically the next three to six months across the board,” Najarian said. “The cutbacks and the sanctions, that’s going to be the result, higher energy prices.”
Oil supply is a big question mark, but Wall Street seems to think the energy sector has room left to run.
For a look at ways to invest in the oil and gas industry, visit our detailed guide to the sector.

3. Earnings roundup

Next week’s earnings schedule is pretty quiet, but a few notable earnings are scheduled for release that could move some closely watched stocks.

• Gamestop (GME). Scheduled for Thursday. Shares of Gamestop slumped in the days following its last earnings announcement when the video game retailer posted a much wider loss than Wall Street expected. The company is trying to transform from a brick-and-mortar chain into more of an e-commerce retailer, and Thursday’s earnings will hopefully give investors an idea of how the transition is unfolding. Gamestop’s new leaders have provided few details about their turnaround strategy, and investors in the popular meme stock are hoping for some sort of an outlook.
• Lennar (LEN). Scheduled for Wednesday. After beating on earnings for nine consecutive quarters, home construction and real estate company Lennar came up short in the fourth quarter of its fiscal year 2021, posting earnings per share of $3.91, which fell short of Wall Street estimates of $4.15. Experts say the demand for real estate will remain strong in 2022. Lennar said in its last earnings announcement that it expects to deliver approximately 67,000 homes in 2022, up from 59,825 in fiscal year 2021.
• SentinelOne (S). Scheduled for Tuesday. Cybersecurity startup is slated to report its third earnings report since going public in June 2021. The company missed on its first earnings and beat on its second, but revenue has come out ahead each of the last two quarters. SentinelOne posted revenue growth in excess of 120% year over year for the last two quarters. Russia’s invasion of Ukraine and the growing fears of an escalation of cyberwarfare and the increasing number and frequency of data breaches point to the growing need for cybersecurity services, but the broader slowdown in the tech sector has been weighing on cybersecurity stocks.

At the time of publication, Matt Miczulski owned shares of SentinelOne.

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