CNN described this week as a hell week for Wall Street, as investors prepare for a flood of data that will lead to increased market volatility.

And the biggest fear, according to CNN, is the continued resilience of the US labor market, especially after Federal Reserve officials said on several occasions that they believe high inflation rates will remain steady until employment numbers and the pace of wage increases begin to decline. This means that the painful interest rate hikes for the markets are likely to continue.

In just one year, the Federal Reserve raised interest rates from almost zero to a range of 4.5 percent to 4.75 percent to cool the economy and curb inflation. Meanwhile, the labor market has proven stronger than ever, and despite mass layoffs at companies like Facebook, Google, and Microsoft, the number of job vacancies still exceeds the number of job seekers.

Analysts expect the US economy to have added 200,000 jobs in February, a number lower than in January but still high. The unemployment rate is expected to remain unchanged at 3.4 percent, according to what was reported in the CNN report</p>

The expected lack of movement in the unemployment rate has led some economists to raise their growth forecasts higher.

Federal Reserve Chairman Jerome Powell will make a statement before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday.

Powell will deliver the "Semiannual Monetary Policy Report to Congress," followed by hours of questions from lawmakers.

According to CNN, the report emphasizes that there is more work to be done to reduce annual inflation to the Federal Reserve’s target of 2 percent.

President Joe Biden is expected to present the annual budget to Congress on Thursday. The president’s budget is usually used as a guideline for Congress to help set spending priorities for the coming year, according to CNN.

Bloomberg’s report points to four major events over the next 13 trading sessions on Wall Street, which will be key factors in determining the fate of the stock market.

The report notes that after Powell’s testimony on Tuesday, the February jobs report is on March 10 and the consumer price index on March 14.

Then, on March 22, the Federal Reserve will issue its policy decision and quarterly interest rate outlook, and Powell will hold his press conference. This will give investors a clear idea of whether the central bank will pause interest rate hikes in the coming months.

Bloomberg’s report highlights the main points investors will watch:

Powell’s Testimony

The Federal Reserve Chairman’s semiannual monetary policy report to the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday is likely to provide hints about the US economic outlook, particularly inflation, wage pressures, and employment. It signals to traders and investors the steps the Federal Reserve will take regarding interest rates.

Jobs Report

The labor market was strong in January, and Bloomberg explains that a strong market fuels inflation because wage growth can keep prices elevated.

Inflation Data

The consumer price index reading for February is crucial. Any sign of ongoing inflation might push the Federal Reserve to raise interest rates higher than expected. The forecast for the consumer price index in February is 6 percent, improving from 6.4 percent in January. The core consumer price index, which excludes volatile food and energy components and is considered a better gauge than the headline measure, is expected to rise by 5.4 percent from February 2022 and 0.4 percent from the previous month.

Federal Reserve officials agree on the need to keep US interest rates higher for longer, reflecting concerns about recent inflation data coming in above expectations and worries about global economic trends that could fuel price pressures, according to a previous report from the Financial Times.

The newspaper concluded this based on the statement of the Federal Reserve Bank of San Francisco President, Mary Daly, on Saturday, that "to get rid of high inflation, it may be necessary to adopt more monetary policy tightening and maintain it for longer."

Daly emphasized in her speech that "restoring price stability is our mission, and it is what the American people expect from us."

The Financial Times notes that Daly’s comments come after a series of hawkish remarks from other senior officials at the US central bank, following economic indicators showing that inflation in the United States is not receding as quickly as hoped, and the US labor market remains remarkably strong.

The month is also pivotal for Federal Reserve policy and economic data, according to the newspaper, which pointed out that during the week, Jerome Powell, Federal Reserve Chairman, will testify before Congress in remarks that will pave the way for the anticipated Federal Reserve policy meeting on March 21-22.

New data on inflation and the US job market will determine whether the Federal Reserve proceeds with a 25 basis point interest rate increase as expected, or if the increase will be sharper, possibly a 50 basis point hike.

Within this framework, Minneapolis Federal Reserve President Neel Kashkari stated last week, saying: "I am open to the option of raising interest rates by 25 or 50 basis points at the next meeting."

Therefore, Federal Reserve Governor Christopher Waller pointed out on Thursday that “recent data indicate that consumer spending is not slowing down that much, the labor market remains strong, and inflation is not falling as fast as I had imagined.”

Waller added that he hopes future data will show signs of "progress" toward the Federal Reserve’s goal of cooling the economy.

Daly raised on Saturday the shift of several structural factors in the United States and global economies in recent years to create a more inflationary environment, especially post-COVID.
In her talk to reporters after the speech, Daly said it is too early to discuss details about monetary policy at the next meeting, saying she will seek "additional information" from data (to make decisions).

According to Daly, inflation remains high across all sectors, goods, housing, and other services.