History shows quiet weeks for economic data are often the best weeks for stocks. Here's what to watch.

By Isabel Wang

U.S. stocks were rising on Monday, kicking off what promises to be a relatively quiet week for economic data. History says weeks with a quiet macroeconomic calendar have seen better-than-average returns for the stock market, according to BofA Global Research.

Since 2014, the large-cap S&P 500 index SPX has risen 0.6% during weeks with no key macroeconomic data releases, compared with a 0.2% increase in other weeks on a median basis, a team of strategists led by Ohsung Kwon, equity and quant strategist at BofA Global Research, said in a Monday note. They said quiet weeks have also consistently produced positive returns over the past 10 years on a median basis (see chart below).

"This week, we have a few Fed speakers and the Senior Loan Officer Opinion Survey (SLOOS), but it's a relatively quiet week for macro releases," the BofA strategists wrote. "But after a busy week last week, the market will have a lot to digest. We are now past uncertainty of the Fed, jobs report and earnings, all of which were net positive for stocks last week."

U.S. stocks have been swinging sharply in the second quarter of 2024. The three benchmark stock indexes tumbled in April on fears that sticky inflation would delay the Federal Reserve's interest-rate cuts, propelling the 10-year and 30-year Treasury yields BX:TMUBMUSD10Y to their highest levels in November.

But markets then found a solid footing last week after Chair Jerome Powell calmed Wall Street by saying a rate hike is unlikely to be the central bank's next move, while a cooler-than-expected April jobs report also boosted hopes that policymakers may start cutting interest rates soon.

On Monday, the S&P 500 and the Nasdaq Composite COMP have risen for three consecutive days, on pace for their largest three-day point and percentage gains since Nov. 14, according to Dow Jones Market Data. The Dow Jones Industrial Average DJIA was up for four straight trading days. It was on pace for the largest four-day point and percentage advance for the blue-chip index since March, according to Dow Jones Market Data.

See: Stock-market bulls face test as consumers start to show signs of stress

Despite the lack of major macroeconomic data this week, investors will get more clues on future Fed moves, with Richmond Fed President Tom Barkin and New York Fed President John Williams slated to speak on Monday early afternoon, followed by Minneapolis Fed President Neel Kashkari a day later.

Fed Vice Chair Philip Jefferson, Boston Fed President Susan Collins and Chicago Fed President Austan Goolsbee will also make appearances later this week, among other Fed officials.

"Fed speak this week should help determine whether Powell's dovish comments at the FOMC reflect the broader committee view," a team of Citigroup economists led by Andrew Hollenhorst, said in a Monday client note. "We expect they do - including his [Powell's] emphasis on the employment mandate and his view that rate hikes are unlikely."

NY Fed President Williams comments will be more "informative" as he is both more of a centrist and more influential as the Vice Chair of the policy setting committee, the Citigroup economists said, adding that prior to the FOMC blackout period in April, Williams responded to a question by saying the Fed could hike if conditions warranted, but he may use the opportunity on Monday to clarify that he agrees with Powell that the next move is very likely to be a cut.

Williams is set to speak on Monday at 1 p.m. Eastern time.

See: The bar is creeping higher for second-quarter earnings

The peak of corporate earnings season has passed, with 80% of the companies in the S&P 500 index having already reported their financial results for the first quarter, but 56 companies in the large-cap index are still scheduled to report this week, according to FactSet.

Results are due from The Walt Disney Co. (DIS), Uber Technologies Inc. (UBER), Occidental Petroleum (OXY), Rivian Automotive (RIVN), among others.

-Isabel Wang

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05-06-24 1203ET

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