We've been watching earnings and big U.S. economic indicators like Friday's jobs report as of late. However, this week kicks off with big market-moving news from overseas: The French election.
L'élection de France
France's election was a showdown between mainstream candidate Emmanuel Macron and upstart populist Marine Le Pen.
For a while, it looked like Le Pen — occasionally referred to as France's Donald Trump — might pull off an earth-shattering upset that would lead to all kinds of ramifications. Not least among the possibilities was that France might follow the UK's lead in leaving the European Union, an event that could snowball across the continent.
Instead, Macron cruised to victory in the runoff election Sunday.
Should that remain the case, it's widely expected to trigger an even bigger rally in global stocks. However, that doesn't necessarily mean U.S. stocks will get a boost. Some big names that do a lot of business in Europe such as Visa and McDonald's are expected to see a boost, but as of Sunday night, U.S. stock-market futures, which are used as a gauge of which way stocks will go when trading opens at 9:30am ET, were slightly negative.
An inflation look
The week is pretty sparse as far as market-moving economic reports go. But there is one coming up on Friday that will get some attention.
That's when the government will report the latest inflation numbers as expressed through the Consumer Price Index. The CPI puts together a list of goods and services and tallies up the price, then expresses the measure in percent change in both monthly and annual terms.
Economists expect the report to show that prices rose 2.3 percent on the year and 0.3 percent for April.
Why it matters: The Fed is almost certain to raise its benchmark interest rate another quarter-point in June, but it will be looking closely at inflation numbers before doing so. The U.S. central bank wants to see inflation hover around the 2 percent mark. If the CPI report meets expectations, it makes it even more likely the Fed will hike.
And, when the Fed raises rates, that means rates on everything from your credit card to your mortgage will start going up as well — particularly if you have variable interest rate.
Friday also brings a report on retail sales, which have been really weak. Economists are expecting a rebound for April, with the monthly gain projected to be 0.6 percent, according to FactSet.
Sell in May vs. Stay in May
One of the most popular sayings on Wall Street is "Sell in May and go away." May through October tends to be a volatile period so that's how this catch-phrase came to be. There's actually been some historical wisdom to the saying.
Since the end of World War II, the S&P 500 stock-market index has gained an average of 6.7 percent from November to April, but then has moved up just 1.6 percent from May to October, according to Sam Stovall, the chief investment strategist at CFRA.
Two things to keep in mind, though, before calling your advisor: 1) This year is anything but typical. With President Donald Trump pushing an aggressive pro-growth agenda, the past may not be prologue for the current setup; 2) Stovall also has found that shifting allocations from cyclical stocks like energy and materials into defensive sectors like staples and utilities has been better than selling in May and going away.
"History says investors would be better off rotating then retreating," Stovall says.
Of course, there's a third point: The market is getting rich, so this could be a good time for a pause or perhaps mild pullback. Now, that doesn't mean head for the hills. If you want to trade like the pros, be ready to buy on the dip. When stocks fall it can be scary but if you have the stomach for it, you can find some great bargains — and make some money.
Looking for a few tips?
Investor conference season has been in full bloom for the past several weeks, and this week features one of the biggies.
The Sohn Investment Conference is set for Monday in New York. And, even if you're not attending, pay attention to the headlines. You'll see a lot of stock picks coming from some of the biggest names in investing.