With economic data being shoveled aside like snow and earnings season winding down, U.S. stock investors could zero in this week on the Fed's view of the economy and technical analysis charts as the S&P 500 nears its record high.
The Fed writes the script for Wall Street. The minutes of the Federal Reserve's most recent meeting of its policy-setting committee will be published on Wednesday, the second trading day of a holiday-shortened week in the United States. The U.S. stock market will be closed on Monday for Presidents Day. Wall Street will resume trading on Tuesday.
Investor interest in the minutes of the Jan. 28-29 meeting will focus on discussions surrounding the Fed's forward guidance. The U.S. central bank's 6.5 percent unemployment threshold for considering an interest-rate increase seems stale with the jobless rate now at 6.6 percent.
The Fed doesn't expect to start raising rates until at least late next year. So Wall Street will concentrate on the Fed's maneuvering over how to adjust this guidance, which is supportive of higher equity prices.
"We want to see any discussion on the language moving away from the thresholds," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey. "It's clear the thresholds are boxing them in.
"The market wants to hear they are flexible regarding data that perhaps continues to soften," she said. "Any sense of what it would take for them to pause the tapering will be important."
Fed Chair Janet Yellen said in her first congressional testimony last week that "unseasonably cold temperatures ... may be affecting economic activity in the job market and elsewhere," giving traders a reason to dismiss a recent soft patch of economic data.
In December, the Fed announced that it would begin to shrink the amount it spends monthly on asset purchases in its stimulus program to support the economy. The beginning of the end of the stimulus shifted market focus to fundamentals and economic data.
Traditionally market-moving numbers this week include U.S. housing starts on Wednesday and existing home sales on Friday, as well as producer and consumer price inflation on Wednesday and Thursday, respectively.
If the recent pattern continues, however, any weakness in the numbers will be disregarded, blamed on excessive cold weather, and the market will move on.
"The market is getting used to the bad weather, factoring it in," said John Canally, investment strategist and economist for LPL Financial in Boston. "But the story is,