A flurry of Fed speakers and any new trade developments could shake up what normally might be a slow week of trading ahead of the three-day Memorial Day holiday weekend.
Stocks ended the past week with losses, as trade-related headlines caused big swings in the market. The Dow ended the week with a 0.7% loss to 25,764 in its fourth negative week. The S&P 500 fell for a second week, losing 0.8% to 2,859. The Nasdaq lost even more, 1.2% for the week, after U.S. action against China's Huawei depressed U.S. tech names that do business in China.
Friday ended with losses in the final hour, after CNBC's Kayla Tausche reported that talks between the U.S. and China appear to have stalled, and there have been no discussions on scheduling a new round.
"With the trade stuff, this is brass knuckles time. When you institute tariffs...when you go to 25% like we just did, all of a sudden there's no room for error," said Peter Boockvar, chief investment officer at Bleakley Advisory Group. "The stakes are so much greater at 25%, and if we did the other $300 billion dollars, then we start damaging the consumer and you can guarantee a global recession."
The U.S. raised tariffs last week from 10% to 25% on $200 billion in goods, and China responded by raising tariffs on $60 billion in goods.
Boockvar, like others, had been looking for a trade deal earlier in the month, but there has been no sign of positive movements, and the crackdown on Huawei raised concerns about China retaliating against U.S. companies.
"China is not bending and with Trump taunting them, they're pissed. It still remains the case that everyone wants a deal , It's in everyone's best interest. It's tough to negotiate when you get hit in the head with a baseball bat," said Boockvar.
In the week ahead, Fed Chair Jerome Powell speaks Monday night at the Atlanta Fed's annual conference on Amelia Island, Fla. and there are about a dozen Fed speakers appearing at various conferences and events. There are also minutes Wednesday afternoon from the last Fed meeting, where Powell re-emphasized that the Fed was on hold and it did not see low inflation as a big enough reason to cut rates.
The market this week began pricing in more than one Fed rate cut for this year, as traders in fed funds futures reacted to some weaker economic data.
"Whatever message the Fed feels like it needs to get across, they'll use the minutes to do it. I think they're really going to pound the table that they're doing nothing for now. They don't want to give in to what the market is pricing in, and that's a rate cut," said Boockvar.
Both retail sales and industrial production were weaker than expected in the past week. The coming week is light on data though there are PMI manufacturing data Thursday and durable goods data on Friday.
Existing home sales Tuesday and new home sales on Thursday could also be an important read on the spring housing market.
There are a few final earnings reports for the quarter, including major retailers like Home Depot, Target, Best Buy, and Lowe's.
"Who knows? Liquidity will be light, its Memorial Day, maybe we'll get a tweet," said one trader.
Earnings: Ryanair, Nordson, Qudian
8:30 a.m. Philadelphia Fed President Patrick Harker
1:05 p.m. Fed Vice Chair Richard Clarida
7:00 p.m. Fed Chair Jerome Powell on assessing risk at Altanta Fed conference
10:00 a.m. Existing home sales
10:45 a.m. Chicago Fed President Charles Evans at Atlanta Fed conference
12:00 p.m. Boston Fed President Eric Rosengren at Economics Club of New York
1:00 a.m. St. Louis Fed President James Bullard in Hong Kong
10:10 a.m. Atlanta Fed President Raphael Bostic at Dallas Fed tech enabled disruption conference
2:00 p.m. FOMC minutes
8:30 a.m. Initial claims
9:45 a.m. Manufacturing PMI
9:45 a.m. Services PMI
10:00 a.m. New home sales
1:00 p.m. Fed panel with Dallas Fed President Robert Kaplan; San Francisco Fed President Mary Daly; Atlanta Fed's Raphael Bostic, and Richmond Fed President Tom Barkin at Dallas Fed's Tech enabled disruption conference
Earnings: Foot Locker, The Buckle
8:30 a.m. Durable goods