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Markets Closed Monday in Observance of Juneteenth; Central Banks Respond to High Inflation

Monday, June 20, 2022 03:35 PM | Neal Farmer
Markets Closed Monday in Observance of Juneteenth; Central Banks Respond to High Inflation

Markets were closed Monday in observance of the Juneteenth holiday which commemorates the emancipation of enslaved African Americans. The rest of the week remains relatively light on new economic data and earnings reports.

Economic Data and Earnings

New and existing home sales highlight the economic calendar this week in addition to the weekly unemployment claims report. New home sales are expected to come in slightly higher than last month with at an annualized rate of 595,000 new sales projected for May compared to April’s 591,000. Existing home sales meanwhile are estimated to be slightly lower at an annualized rate of 5.4 million sales versus the 5.61 million reported in April. Lastly, initial unemployment claims are expected to stay relatively flat at 230,000 following 229,000 new claims the previous week.

Meanwhile, the bigger names set to release quarterly performance include Accenture (ACN), Rite Aid (RAD), FedEx (FDX), CarMax (KMX), and Carnival (CCL).

Rite Aid in particular is expected to report a far worse performance from its year-ago quarter with second quarter revenue projections at $5.8 billion compared to the $6.2 billion in the second quarter of 2021. The consensus for Rite Aid’s earnings-per-share (EPS) sits at -$0.70 versus the $0.38 reported last year.

In its last quarter (Q1 2022) Rite Aid reported a negative earnings surprise of 186%. Supply chain disruptions and weak store traffic are negatively impacting inventory and sales for Rite Aid with COVID-19 vaccinations also not boosting performance as much as previously reported with vaccination rates dropping significantly as the majority of Americans wanting the vaccine have already been fully vaccinated.

Interest Rates and Inflation

While investors will be watching out for new earnings reports and economic data releases, the larger concern for many is the dynamic between rising interest rates and inflation as fears of an impending recession are mounting with the Federal Reserve’s more aggressive tightening of monetary policy. Analysts are mixed on stock pressures in the near future as JPMorgan said pressure on equities should ease as inflation cools down while Morgan Stanley warns of further losses to stocks.

Meanwhile, the Federal Reserve is far from alone in its decision to accelerate rate hikes as the Swiss National Bank and Bank of England voted for rate increases last week. Additionally, the European Central Bank is ready to combat unwarranted financial-market moves and is preparing for increased volatility as it looks to exit negative interest rates.

Lastly, crypto investors will await to see if cryptocurrencies can find some support and recover losses as Bitcoin (BTC) now hovers around $20,000 and Ethereum (ETH) trades just over $1,100 after the two coins reached highs around $60,000 and $4,800 just back in November.

Economic Events this Week

Tuesday

- 10:00 a.m. - Existing Home Sales

Wednesday

- 7:00 a.m.- MBA Mortgage Applications Index

Thursday

- 8:30 a.m. - Initial & Continuing Claims

- 10:30 a.m. - EIA Natural Gas Inventories

Friday

- 10:00 a.m. - New Home Sales

- 10:00 a.m. - University of Michigan Consumer Sentiment - Prelim

Earnings Reports This Week

Tuesday:

Before the bell:

LEN

After the bell:

LZB

Wednesday:

Before the bell:

WGO, KFY

After the bell:

KBH, WOR, FUL, SCS

Thursday:

Before the bell:

ACN, RAD, DRI, GMS, FDS, APOG

After the bell:

FDX, SWBI, BB, CAMP

Friday:

Before the bell:

KMX, CCL

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