Week ahead: Markets brace for volatility as Powell speech, economic data, and earnings flood loom

Investors are preparing for another potentially turbulent week in financial markets as they face a barrage of economic data, Federal Reserve commentary, and key corporate earnings, all against the backdrop of lingering uncertainty around inflation, trade policy, and interest rates.

Following what Deutsche Bank described as “another historically volatile week for markets,” the days ahead could be equally unsettled, particularly with Fed Chair Jerome Powell scheduled to speak Wednesday at the Economic Club of Chicago. The timing is crucial, coming just days before a long Easter weekend when both bond and equity markets will be closed for Good Friday.

"Powell's speech will be most in focus for investors this week," Deutsche Bank analysts wrote in a Monday note, adding that recent comments from Fed officials have emphasized a growing concern over persistent inflation. Policymakers have reiterated that it is their “obligation” to defend price stability and avoid inflation expectations becoming unanchored.

Charles Schwab echoed that tone, noting on Friday that markets were buoyed by remarks from Fed Governor Susan Collins, who stated the central bank “stands ready to provide support.” Yet Schwab’s analysts added that “what remains unclear at this point… is what the Federal Reserve would define as a ‘disorderly’ market,” underscoring the ambiguity still surrounding potential intervention.

Fed rhetoric in the spotlight

Beyond Powell, the week is packed with Fed appearances. Governor Waller kicks things off Monday with an economic outlook, followed by non-voting members Philadelphia’s Harker and Atlanta’s Bostic. Governor Cook will speak Tuesday, with Cleveland’s Hammack and Dallas’s Logan providing insight Wednesday, especially on how the Fed is interpreting recent financial market stress. On Thursday, Governor Barr will address cyber risks and financial stability, while San Francisco’s Daly wraps up the week with a moderated Q&A on Friday.

“If market volatility persists, conversations with two of the Fed’s market experts… could also provide interesting insights into the Fed’s views around recent market developments,” Deutsche Bank noted.

Retail sales, housing in focus

Investors will also be closely watching a slate of economic data that could influence the Fed's thinking. Wednesday’s retail sales figures are expected to show a headline gain of 0.8%, but the underlying story may be more complex. Deutsche Bank pointed to a 10.4% increase in light vehicle sales likely distorting the topline, with core categories like non-store retailers facing potential pullbacks.

Other key data points include Empire State and Philadelphia Fed manufacturing surveys, both likely impacted by President Trump’s recent tariff actions. “We expect both series to take a significant hit,” Deutsche Bank said, citing early signs of deteriorating business sentiment. Housing starts and building permits data on Thursday will offer additional insight into the resilience of the construction sector following weather-related swings in earlier months.

Earnings season accelerates

On the corporate front, Q1 earnings season ramps up with a roster of influential companies reporting results. Highlights include Goldman Sachs (GS), Bank of America (BAC), Citigroup (C), Johnson & Johnson (JNJ), Abbott Labs (ABT), Taiwan Semiconductor (TSM), and United Airlines (UAL).

However, Schwab analysts believe results will take a backseat to any potential tariff negotiations and movement in the bond market. Rising Treasury yields remain a key risk to equity valuations, and further escalation—or delay—in trade talks could sway sentiment rapidly.

From a technical standpoint, Schwab noted that if the S&P 500 continues its current upward momentum, “it will be interesting to see if it can make a push above near-term resistance around 5,500.” That said, volatility remains the base case. Schwab’s analysts noted that, similar to the previous week, they found it difficult to make a directional call due to numerous uncertainties. As a result, their forecast for the upcoming week is a "Breakout," which they define as a move greater than 2% in either direction by next Friday.

With bond markets closing early on Thursday and both bond and stock markets shuttered on Friday, liquidity could dry up ahead of the holiday, amplifying moves in either direction.

“Investors and Fed policymakers will be focused on markets as they continue to grapple with the fallout from recent historic trade announcements,” Deutsche Bank noted.

Despite a temporary 90-day suspension of tariffs affecting more than 75 countries, the economic picture remains cloudy. “Not everyone is convinced that the economic turbulence is over.”

Whether markets break higher or lower, one thing seems certain: the week ahead won’t be a quiet one.